International Monetary Fund:

The purpose of International Monetary Fund is to secure and promote Economic and financial cooperation among member countries. The IMF was established to assist the member nations to tide over the Balance of Payments Disequilibrium in the short term. At Present, the IMF has 189 member Countries with Republic of Nauru joined in 2016.

Objectives of IMF:

1. To promote international monetary Cooperation among the member nations.
2. To facilitate faster and balanced growth of international trade.To ensure exchange rate stability by curbing competitive exchange Depreciations.

• To eliminate or reduce exchange Controls imposed by member nations.

1. To establish multilateral trade and Payment system in respect of current Transactions instead of bilateral trade Agreements.
2. To promote the flow of capital from Developed to developing nations.
3. To solve the problem of international Liquidity

Functions of IMF:

• Bringing stability in exchange rate the IMF is maintaining exchange Rate stability and emphasising devaluation Criteria, restricting members to go in for multiple exchange rates and also to buy or Sell gold at prices other than declared par Value.
• Correcting BOP Disequilibrium the IMF is helping the member Countries in eliminating or minimizing the short-period disequilibrium in their Balance of payments either by selling or Lending foreign currencies to the member Nation.
• Determining par valuesIMF enforces the system of Determination of par values of the Currencies of the member countries. According to the Articles of Agreement of the IMF, every member nation should declare the par value of its currency in Terms of gold or US dollars. Under this Article, IMF ensures smooth working of the international monetary system, in Favour of some developed countries.
• Balancing demand and supply of currencies IMF is entrusted with the important Function of maintaining balance between Demand and supply of various currencies. The Fund (IMF) can declare a currency as Scarce currency which is in great demand And can increase its supply by borrowing It from the country concerned or by Purchasing the same currency in exchange of gold.

Reducing trade restrictions:

The Fund also aims at reducing Tariffs and other trade barriers imposed By the member countries with the purpose of removing restrictions on remittance of Funds or to avoid discriminating practices.

Providing credit facilities:

IMF is providing different borrowing And credit facilities with the objective of helping the member countries. These credit Facilities offered by it include basic credit Facility, extended fund facility for a period Of three years, compensatory financing Facility and structural adjustment facility. The functions of the IMF are grouped under three heads.

1. Financial – Assistance to correct short And medium term deficit in BOP;
2. Regulatory – Code of conduct and
3. Consultative – Counseling and technical consultancy.

Facilities offered by IMF:

The Fund has created several new credit Facilities for its members. Chief among Them are:

Basic Credit Facility:

The IMF provides financial assistance to its member nations to overcome their Temporary difficulties relating to balance Of payments. A member nation can Purchase from the Fund other currencies Or SDRs, in exchange for its own currency, to finance payment deficits. The loan is Repaid when the member repurchases it Own currency with other currencies or SDRs. A member can unconditionally Borrow from the Fund in a year equal to 25% of its quota. This unconditional borrowing right is called the reserve Tranche.

Special Drawing Rights (SDRs):

The Fund has succeeded in establishing a scheme of Special Drawing Rights (SDRs) which is otherwise called ‘Paper Gold’. They are a form of international reserves Created by the IMF in 1969 to solve the problem of international liquidity.

They are allocated to the IMF members In proportion to their Fund quotas. SDRs are used as a means of payment By Fund members to meet balance Of payments deficits and their total Reserve position with the Fund. Thus SDRs act both as an international unit of account and a means of payment. All Transactions by the Fund in the form of Loans and their repayments, its liquid Reserves, its capital, etc., are expressed In the SDR.

The achievements of the fund can be summed up in the words of Haien That ‘Fund is like an International Reserve Bank.’

Extended Fund Facility:

Under this arrangement, the IMF Provides additional borrowing facility Up to 140% of the member’s quota, over And above the basic credit facility. The Extended facility is limited for a period up To 3 years and the rate of interest is low in Compensatory Financing Facility

In 1963, IMF established Compensatory financing facility to provide Additional financial assistance to the Member countries, particularly primary Producing countries facing shortfall in Export earnings. In 1981, the coverage of the compensatory financing facility was extended to payment problem caused by the fluctuations in the cost of cereal inputs.

Buffer Stock Facility:

The buffer stock financing facility was started in 1969. The purpose of this Scheme was to help the primary goods (food grains) producing countries to Finance contributions to buffer stock Arrangements for the stabilisation of Primary product prices.

Supplementary Financing Facility:

Under the supplementary financing Facility, the IMF makes temporary Arrangements to provide supplementary financial assistance to member countries facing payments problems relating to their Present quota sizes.

Structural Adjustment Facility:

The IMF established Structural Adjustment Facility (SAF) in March 1986 to provide additional balance of payments Assistance on concessional terms to the Poorer member countries. In December 1987, the Enhanced Structural Adjustment Facility (ESAF) was set up to augment the Availability of concessional resources to Low income countries. The purpose of SAF and ESAF is to force the poor countries to undertake strong macroeconomicAnd structural programmes to improve their balance of payments positions and Promote economic growth.

Achievements of IMF:

The main achievements of International Monetary Fund are as Follows:

Establishment of monetary reserve Fund:

The Fund has played a major role in achieving the sizeable stock of the national Currencies of different countries. To meet the foreign exchange requirements of the Member nations, IMF uses its stock to help the member nations to meet foreign Exchange requirements.

Monetary discipline and Cooperation:

The IMF has shown keen interest in maintaining monetary discipline and cooperation among the member Countries. To achieve this objective, it has provided assistance only to those Countries which make sincere efforts to solve their problems.

Special interest in the problems of UDCs:

 The notable success of the Fund is the maintenance of special interest in the acute problems of developing countries. The Fund has provided financial assistance to solve the balance of payment problem Of UDCs. However, many UDCs continue to be UDCs, while the developed countries have achieved substantial growth

India and IMF:

Till 1970, India stood fifth in the Fund and it had the power to appoint a Permanent Executive Director. India has been one of the major beneficiaries of the Fund assistance. It has been getting aid from the various Fund Agencies from time To time and has been regularly repaying its Debt. India’s current quota in the IMF is SDRs (Special Drawing Rights) 5,821.5 Million, making it the 13^th largest quota holding country at IMF with shareholdings Of 2.44%. Besides receiving loans to meet Deficit in its balance of payments, India Has benefited in certain other respects from the membership of the Fund.

What is SDR?

• Fiat Money of the IMF
• A Potential Claim on Underlying Currency Basket

What Does SDR Stand For?

• Special Drawing Rights (SDR)

Why Was the SDR Created?

• To be “The” World Reserve Currency
• Create Global Liquidity

How is the SDR Valued?

• Original 1969 Creation“The value of the SDR was Initially defined as equivalent to 0.888671 grams of fine gold – which, At the time, was also equivalent to one U.S. dollar.”

International Bank for Reconstruction and Development:

(IBRD) or World Bank The International Bank for Reconstruction and Development (IBRD), otherwise called the World Bank (WB) was established in 1945 under the Bretton Woods Conference in 1944. The purpose is to bring about a smooth transition from a war-time to peace-time economy. It is known as a sister institution along with The International Monetary Fund. Themembership in International Monetary Fund is a prerequisite to become a member Of IBRD. The IBRD was established to provide long term financial assistance to Member countries.

Objectives of the World Bank:

• Reconstruction and Development
• Encouragement to Capital Investment
• Encouragement to International Trade
• Establishment of Peace-time Economy
• Environmental Protection

The following are the objectives of the World Bank:

1. To help member countries for economic Reconstruction and development.
2. To stimulate long-run capital investment for restoring Balance of Payments (BoP) equilibrium and thereby ensure balanced development of international Trade among the member nations.
3. To provide guarantees for loans meant for infrastructural and industrial Projects of member nations.To help war ravaged economies Transform into peace economies.
4. To supplement foreign private Investment by direct loans out of its Own funds for productive purposes.World Bank’s Lending Procedure:The Bank advances loans to members In three ways
5. Loans out of its own fund,
6. Loans out of borrowed capital and

• Loans through Bank’s guarantee.

The Bank (WB) has changed its Development loan strategy and lays more Emphasis on financing schemes which directly influence the well being of poor Masses of the member countries, especially the developing countries. The amount of agricultural loans has increased more rapidly than in any other sector. The bank now also takes interest in the activities of the development of rural areas such as:

1. Spread of education among the rural People
2. Development of roads in rural areas and
3. Electrification of the villages.

Functions of IBRD:

The World Bank performs the major Role of providing loans for development Works to member countries, especially to underdeveloped countries. The World Bank provides long-term loans for various Development projects. Article 1 of the Agreement states the functions performed by the world bank as follows.Investment for productive purposes.

The World Bank performs the Function of assisting in the reconstruction and development of territories of member Nations through facility of investment for Productive purposes. It also encourages the development of productive facilities and resources in less developed countries.

Balanced growth of international Trade: Promoting the long range balanced Growth of trade at international level and the maintaining equilibrium in BOPs of member nations by encouraging International investment.

Provision of loans and guarantees: Arranging the loans or providing Guarantees on loans by various other Channels so as to execute important Projects.

Promotion of foreign private Investment: The promotion of private foreign Investment by means of guarantees on Loans and other investment made by Private investors. The Bank supplements Private investment by providing finance for productive purpose out of its own Resources or from borrowed funds.

Technical services:

The World Bank facilitates different Kinds of technical services to the member Countries through Staff College and Experts.

Achievements of World Bank:

The World Bank is said to be successful In achieving its primary objective of Reconstruction and development of war Ravaged nations. It helped greatly in the reconstruction of Europe after the World War II. It has been providing the Developed and developing countries the same treatment in the process of growth.

It is noted that the Bank’s membership has increased from the initial number of 30 countries to 68 countries in 1960 and To 151 countries in 1988. The IBRD has 189 member countries.

The Bank grants medium and long-Term loans (i.e., payable over a period of 15-20 years) for reconstruction and Development purposes to the member Countries. The actual term of a loan Depends upon the estimated useful life of the equipment or plant financed.

1. Initially the World Bank’s loans were mainly directed at the European Countries for financing their Programmes of reconstruction. Later it changed its development loan strategy and lays more emphasis of financing Schemes for the poor masses of the Developing countries.
2. The World Bank grants loans to Member countries only for productive Purposes particularly for agriculture, Irrigation, power and transport. In Other words, the Bank strengthens Infrastructure needed for further Development.

The International Development Association (IDA), the Soft Loan Window of the Bank provides loans To UDCs at very low rate of interest.

However, the economic inequality among the member-countries goes on Increasing. Many African countries are yet to improve their economic status.

India and World Bank:

The name “International Bank for Reconstruction and Development” Was first suggested by India to the Drafting committee. Since then the two have developed close relationship with Each other from framing the policies of economic development in India to financing the implementation of these Policies. The World Bank has given large financial assistance to India for economic development. Special mention may be made of the assistance World Bank has given to India in the development of Infrastructure such as electric power, Transport, communication, irrigation Projects and steel industry.

The World Bank has assisted a Number of projects in India. The IFC Has identified five priority areas, namely, Capital market development, direct foreign Investment, access to foreign markets, Equity investments in new and expanding Companies and infrastructure. The World Bank has also assisted India in accelerating Programmes of poverty alleviation and Economic development. Until China Became the member of World Bank in 1980, India was the largest beneficiary of The World Bank assistance.

World Trade Organization:

The WTO was established in 1995 as a successor To the GATT. It is a New international Organization set up As a permanent body And is designed to Play the role of watch dog in the spheres Of trade in goods and services, foreign Investment and intellectual property Rights. The Dunkel Draft formulated By Arthur Dunkel, its Secretary General Became the base for WTO. Every two years, the member Countries’ Commerce Ministers Conference is being organized to discuss and settle the important souls and trade related matters. The first WTO conferenceWas held at Singapore in 1996. The recent Conference was held at Argentina in 2017. It was planned to organize 12^th ministerial Conference at Kazakhstan in 2020

Objectives of WTO:

The basic aim is to expand International trade and bring about Economic prosperity by liberalizing trade Restrictions.

1. To ensure reduction of tariff and other Barriers.
2. To eliminate discrimination in trade.

• To facilitate higher standard of living.

1. To facilitate optimal use of world’s Resources.
2. To enable the LDCs to secure fair share In the growth of international trade.
3. To ensure linkages between trade Policies, environmental policies and Sustainable development.

WTO Agreements:

Agreement on Trade Related Intellectual Property Rights (TRIPs)

Intellectual Property Rights Include copy right, trade marks, patents, Geographical indications, trade secrets, Industrial designs, etc. TRIPS Agreement Provides for granting product patents Instead of process patents. The period of protection will be 20 years for patents; 50 years for copy rights, 7 years for trade Marks and 10 years for layout designs. As A result of TRIPS, the dependence of LDCs On advanced countries for seeds, drugs, Fertilizers and pesticides has increased. Farmers are depending on the industrial Firm for their seeds.

Agreement on Trade Related Investment Measures (TRIMs):

TRIMs are related to conditions or Restrictions in respect of foreign investment in the country. It calls for introducing Equal treatment for foreign companies on par with national companies. TRIMs were widely employed by developing countries. Restrictions on foreign investment on following grounds are to be removed.

• No restriction on area of investment.
• No binding on use of local material.
• No mandatory exports.
• No restriction on repatriation of royalty, Dividend and interest.
• No trade balancing requirement, i.e. imports not exceeding exports.

General Agreement on Trade in Services (GATS):

GATS is the first multilateral set Of rules covering trade in services like Banking, insurance, transportation, Communication, etc., All memberCountries are supposed to extend MFN (Most Favoured Nation) status to all other Countries without any discrimination. Transparency should be maintained by Publishing all relevant laws and regulations over services.

Phasing out of Multi Fibre Agreement (MFA):

The multi fibre agreement governed the world trade in textiles and garments since 1974. It imposed quotas on export of textiles by developing nations to the Developed countries. This quota system was to be phased out over a period of ten Years. This was beneficial to India.

Agreement on Agriculture (AoA):

Agriculture was included for the first Time under GATT. The important aspects of the agreement are Tariffication, Tariff Cuts and Subsidy reduction.Dispute Settlement Body the Disputes Settlement Body Puts an end to procedural delays. It is Mandatory to settle any dispute within 18 months. The disputes are resolved through multilateral trading system. However, India has lost a huge export Earnings because of the conditions laid Out by the Body.

Functions of WTO:

The following are the functions of the WTO

1. It facilitates the implementation, Administration and operation of the Objectives of the Agreement and of the Multilateral Trade Agreements
2. It provides the forum for negotiations among its members, concerning their Multilateral trade relations in matters relating to the agreements.

• It administers the Understanding on Rules and Procedures governing the settlement of Disputes.

1. It cooperates with the IMF and the World Bank and its affiliated agencies With a view to achieving greater Coherence in global economic policy making.

Major WTO Functions:

• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for Developing countries
• Cooperation with other international Organizations

Achievements of WTO:

The major achievements of WTO are as Follows

• Use of restrictive measures for BoP Problems has declined markedly;
• Services trade has been brought into the Multilateral system and many countries, As in goods, are opening their markets For trade and investment;
• The trade policy review mechanism Has created a process of continuous Monitoring of trade policy Developments

WTO and India:

India is the founding member Of the WTO. India favours multilateral Trade approach. It enjoys MFN status and allows the same status to all other trading Partners. India benefited from WTO on following grounds:

1. By reducing tariff rates on raw materials, Components and capital goods, it was Able to import more for meeting her Developmental requirements. India’s Imports go on increasing.
2. India gets market access in several Countries without any bilateral trade Agreements. Advanced technology has been obtained at cheaper cost.
3. India is in a better position to get quick redressal from the trade disputes.
4. The Indian exporters benefited from wider market information.

Trade Blocks:

• Some countries create business Opportunities for themselves by Integrating their economies in order to Avoid unnecessary competition among Them. Trade blocks cover different Kinds of arrangements between or among countries for mutual benefit.
• Economic integration takes the form Of Free Trade Area, Customs Union, Common Market and Economic Union.
• A free trade area is the region encompassing a trade bloc whose Member countries have signed a Free-trade agreement (FTA). Such Agreements involve cooperation between at least two countries to reduce trade barriers. E.g. SAFTA, EFTA.
• A customs union is defined as a type of trade block which is composed of A free trade area with no tariff among Members and (zero tariffs among Members) with a common external Tariff. E.g. BENELUX (Belgium, Netherland and Luxumbuarg).
• Common market is established through trade pacts. A group formed By countries within a geographicalArea to promote duty free trade and Free movement of labour and capital Among its members. E.g. European Common Market (ECM)
• An economic union is composed of a common market with a customs Union. The participant countries haveBoth common policies on product Regulation, freedom of movement of goods, services and the factors of Production and a common external Trade policy. (e.g. European Economic Union)

South Asian Association for Regional Co-Operation (SAARC):

The South Asian Association for Regional Co-operation (SAARC) is an Organisation of South Asian nations, which Was established on 8 December 1985 for The promotion of economic and social Progress, cultural development within the South Asia region and also for friendship And co-operation with other developing Countries. The SAARC Group (SAARC) Comprises of Bangaladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. In April 2007, Afghanistan became its eighth member. The basic aim of the Organisation is to accelerate the process of economic and social development of Member states through joint action in the Agreed areas of cooperation. The SAARC Secretariat was established in Kathmandu (Nepal) on 16^th January 1987. The first SAARC summit was held at Dhaka in The year 1985. SAARC meets once in two Years.

Objectives of SAARC:

According to Article I of the Charter of the SAARC, the objectives of the Association are as follows:

1. To promote the welfare of the people of South Asia and improve their quality of Life;
2. To accelerate economic growth, social Progress and cultural development in The region;

• To promote and strengthen collective Self-reliance among the countries of South Asia;

1. To contribute to mutual trust, Understanding and appreciation of one Another’s problems;
2. To promote active collaboration and Mutual assistance in the economic, Social, cultural, technical and scientific Fields;
3. To strengthen co-operation with other Developing countries;

• To strengthen cooperation among Themselves in international forums on Matters of common interest;
• To cooperate with international and Regional organisations with similar Aims and purposes.

Functions of SAARC:

The main functions of SAARC are as Follows.

1. Maintenance of the co operation in the RegionPrevention of common problems Associated with the member nations.
2. Ensuring strong relationship among the Member nations.
3. Removal of the poverty through various Packages of programmes.
4. Prevention of terrorism in the region.

Achievements of SAARC:

1. The establishment of SAARC Preferential Trading Agreement (SAPTA) and reduction in tariff and Non-tariff barriers on imports.
2. The setting up of Technical Committees For economic cooperation among SAARC countries relating to agriculture, Communications, education, health and Population, rural development, science And technology, tourism, etc.
3. SAARC has established a three-tier Mechanism for exchanging information on poverty reduction programmes which is passed on to member countries.
4. SAARC Agricultural Information Centre (SAIC) in 1988 works as a central Information institution for agriculture related resources like fisheries, forestry, Etc.
5. South Asian Development Fund (SADF) for development projects, Human resource development and infrastructural development Projects. With all these tall claims, the inter-SAARC Trade has not gone beyond three percent in the last 30 Years.

Association of South East Asian Nations (ASEAN):

ASEAN was established on 8 August 1967 in Bangkok by the five original Member countries: Indonesia, Malaysia, Philippines, Singapore and Thailand. Later Brunei Darussalam, Vietnam, Laos and Myanmar and Cambodia joined.

Besides ten members of the ASEAN, there are six “dialogue partners” which have been participating in its deliberations. They are China, Japan, India, South Korea, New Zealand and Australia. The ASEAN Nations are expected to benefit from the FTA as it will reduce tariff and non-tariff Barriers. The common historical and Cultural background made the memberCountries to maintain their unity and Solidarity by establishing a trade block. Foreign trade is the life blood of the ASEAN countries following globalization and prudent macroeconomic policies. The ASEAN Summit of the Heads of Governments of member countries is the highest forum for ASEAN cooperation. Its Meetings are held once in three years. The ASEAN \ministerial meeting of Foreign Ministers is the next highest decision-Making body.

India’s relationship with ASEAN:

Started in 1992 when India became a “sectoral dialogue partner” of ASEAN. The geographic proximity of ASEAN Countries to India facilitates faster exports and lower freight costs.

Objectives of ASEAN:

The ASEAN Declaration states the aims and purposes of the Association as:

1. To accelerate the economic growth, Social progress and cultural Development in the region;
2. To promote regional peace and stability and adherence to the principles of the United Nations Charter;
3. To promote cooperation among The members of ASEAN through The exchange of knowledge and Experience in the field of public sector Auditing
4. To provide a conducive environment and facilities for research, training, and education among the members
5. To serve as a centre of information and as an ASEAN link with other International organizations.

Functions of the ASEAN:

• It facilitates free movement of goods, Services and investments within ASEAN by creating a single regional Market like the European Union.
• It provides free access to the marketers of one member country to the markets of all other member countries, thus Fostering growth in the region.
• It improves business competitiveness between businesses from different Countries and also narrow Developmental gaps between member Countries.
• It paves way for market and investment Opportunities for the member nations.
• It fosters co-operations in many areas Including industry and trade.

All the ASEAN economies experienced a Great economic crisis in the year 1997.

BRICS:

BRICS is the acronym for an Association of five major emerging National economies: Brazil, Russia, India, China and South Africa. Originally the First four were grouped as “BRIC” beforeThe induction of South Africa in 2010. The Term ‘BRIC’ was coined in 2001. The BRICS members are known for their significant influence on regional affairs.

Since 2009, the BRICS nations have met annually at formal summits.  The agenda for BRICS summit 2018 Includes Inclusive growth, Trade issues, Global governance, Shared Prosperity, International peace and security.It’s headquarters is at Shanghai, China. The New Development Bank (NDB) formerly referred to as the BRICS Development Bank was established by BRICS States. The first BRICS summit was held at Moscow and South Africa Hosted the Tenth Conference at Johanesberg in July 2018. India had an Opportunity of hosting fourth and Eighth Summits in 2012 and 2016 respectively.The BRICS countries make up 21 Percent of global GDP. They have increased their share of global GDP threefold in the past 15 years.

• The BRICS are home to 43 percent of the world’s population.
• The BRICS countries have combined foreign reserves of an estimated $4.4 Trillion

Objectives of BRICS:

1. To increase trade co-operation by Making an exclusive trade block.
2. To use currency other than US Dollar. Since Dollar is a dominant currency And US can control the flow of dollar, BRICS helps in the countries operating with alternative currencies. How far have they succeeded in this respect? Not much.
3. To increase regional co-operation.
4. To create a separate trade block made for developing countries for trade Co-operation.

Functions of BRICS:

1. It acts as a promoter of more legitimate International system and also advocating Reform of the UN Security Council.
2. This group of nations is especially meant for South-South framework for Cooperation.
3. It performs as an agent to bridge the Increasing gap between developed and Developing countries. For instance, In the WTO, the BRICS countries are emphasizing to promote a fair order regarding agricultural policies.
4. It performs a commendable contribution for assisting developing countries in Gaining in areas such as an advantage in Trade and climate change negotiations.
5. It disseminates information and Exchange platform beyond economic Cooperation.
6. It acts as a catalytic in protecting the Interests of middle powers on global Forum.

Achievements of BRICS:

Following are some of the major Achievements of BRICS.

• The establishment of the Contingent Reserve Arrangement (CRA) has further deepened and consolidated the partnership of its members in the Economic-financial area.
• In the sixth BRICS summit in Brazil, The member countries, signed an Agreement to create a development Bank (New Development Bank) with Headquarters at Shangai, China in 2015 On the lines of Asian Development Bank and the World Bank.
• The economic potential and Demographic development are putting The BRICS countries, increasingly in a Leading position in setting the global Agenda and having a greater say in the Global governance.
• It has to be remembered that BRICS share 43% of world population, but only 21% of the global GDP.