EAS Sarma writes to PM to rethink India’s association with IMF, WB

Appealing to Prime Minister Narendra Modi to go for a rethink on India’s association with the International Monetary Fund (IMF), and the World Bank (WB), retired IAS officer EAS Sarma, former Secretary to the Government of India, opined that these institutions are dancing to the tunes of America and other major economies.

India should also demand fundamental structural reforms to be undertaken by these two financial institutions, in which the USA and Britain are the major stakeholders, and the Asian Development Bank (ADB) in which the US and Japan are major stakeholders. The IMF, influenced by the USA, has opportunistically sanctioned a huge loan to Pakistan at a crucial time, despite opposition from India, pointed out Mr. Sarma, who is also a social activist, in a letter to the Prime Minister.

The IMF has disbursed around $14.9 billion to Pakistan during the last 10 years or so, excluding the latest $ 1 billion sanctioned to it. These funding agencies have lost their neutral character and became instruments in the hands of a few affluent Western nations to impose their capitalist economic ideology and to promote their self-centred political interests on recipients of loans.

The heads of the IMF/World Bank are chosen by a few dominant European nations and the USA. Both these institutions are predominantly guided by ‘experts’ attuned to western economic ideology, unfamiliar with the socio-economic realities of the developing world. The economic policy conditions they attach to loans tend to undermine the sovereignty of the borrower nations, eroding their ownership of national development strategies and tend to ignore their democratic values, and the human rights and environmental safeguards provided in the laws of the borrower nations.

The ‘austerity’ conditions imposed by the IMF, as a part of the loans extended, often ignore their adverse impact on income inequalities in the economies of the recipient countries and accentuation of poverty.

The IMF, which is expected to act as a facilitator for maintaining the stability of the global financial system, had failed to instil confidence among the people in dealing with crisis situations like the global financial crisis in 2008. The IMF’s credibility as an apolitical institution, has eroded.

“Though India figures among large recipients of loans from the World Bank, ADB, and the other global financing institutions, the quantum of its total annual external borrowings is marginal, amounting to a mere trickle in its receipts budget, less than 0.7%,” adds Mr. Sarma.