India to seek higher quotas from IMF

There is a growing feeling among developing economies that "willy-nilly" the fund is emerging as the Orwellian big brother. This impression needs to be corrected through concrete actions," official said.

Quotas for fast-growing developing economies in Asia including India have not increased commensurate with their enhanced importance in the global economy, the sources said adding "We see a major quota revision as an integral part of emerging international financial architecture."

The proposed discussion on the IMF’s quota formula review group recommendations offered an excellent opportunity for a correction in imbalances between developed and developing economies reflecting the dynamism shown by fast-growing Asian economies, thereby improving the governance of IMF, sources said.

India wanted IMF to eschew its `one-size-fits all’ kind of approach to deal with problems of developing countries. While designing programmes the fund should be mindful of the impact that its policy recommendations would have on employment, prices and social expenditure.

In this regard, IMF should modulate its programmes either giving more time for adjustment when possible or allowing fiscal space for compensatory measures, the sources said.

The IMF should not enter into social areas directly by making prescriptions about specific budgetary allocations, social targets or social policies. There should be no surveillance of social issues in the surveillance process nor social conditionality in fund programmes, sources said.

Facilities like the Extended Fund Facility (EFF) which are vital for developing economies undertaking structural reforms in a medium-term framework must be continued by the IMF, the sources said.

Meanwhile, World Bank will release the first tranche of $ 500 million loan for the ambitious Rs 54,000 crore National Highway Development Project this month, Union Minister of Surface Transport Rajnath Singh said here.

"Negotiations for the first tranche of loans with the World Bank were held last month and the multilateral funding agency is expected to release the $ 500 million loan for the four-laning of National Highway between Agra and Barakar in Bihar later this month," Singh said.

The government has already negotiated a $ 180 million loan from Asian Development Bank for four-laning of National Highway between Surat and Manor in Maharashtra, he said.

The aid from the multilateral funding agencies had been held up due to economic sanctions on India following the May 1998 nuclear tests.

These two road projects are part of the ambitious Golden Quadrilateral project linking the four metros – Delhi, Mumbai, Chennai and Calcutta and North-South Corridor (NS) linking Kashmir and Kanyakumari and East-West Corridor (EW) linking Silchar and Porbandar in Saurashtra, through an express highway.

Government hopes to mop up upto $ five billion loan for the prestigious project from various multilateral lending agencies including World Bank, ADB and Overseas Economic Cooperation Fund (OECF) of Japan.

The second tranche of $ 500 million loan from the World Bank was expected during the current financial year, Singh said.

The government was negotiating a total loan of around $ 2.8 billion with the World Bank to be released in tranches of $ 400-500 million per year over a seven year period, ministry sources said.

Similarly, it was negotiating a total loan of around 1.8billion dollars with the ADB to be availed in tranches of $ 200-250 million every year for the next seven years.

Another $ 500-600 million loan, in tranches of $ 100 million, was being negotiated with the Japanese funding agency OECF, sources said.

NHAI would raise Rs. 500 crore through market borrowings during the current financial year to part fund the project, sources said.

"We are in the process of appointing fund managers for the market borrowing programme which is likely to be through private placement and on tap basis," they said.

Besides, a dedicated non-lapsable Central Road Fund (CRF)was being created out of cess on petrol and diesel to ensure steady flow of funds for financing developments and maintenance of National highways, Singh said.

"To meet the requirement of the funds for development of roads a cess has been levied at the rate of Re one per litre since 1998-99 on petrol and since 1999-2000 on diesel," he said adding the cess on diesel would yield Rs 4,791 crore while the cess on petrol would bring in an additional Rs 890 crore annually.