Question

Explain how far India has benefited from IMF

Answer 1

Free Convertibility of Indian Rupee:
Indian rupee has become independent after the establishment of IMF. Earlier it was linked with pound sterling. Its value is now determined in terms of Gold. Hence it is freely convertible.

1. Loan For Development Activities: India got several loan facilities from IMF for its several development projects.

2. Ability To Purchase Foreign Currency: Government of India is able to purchase foreign currencies from time to time to meet the ever-growing requirement of development activities.

3. Expert Advice: India used to get expert advice from IMF for solving the economic problems. It has given valuable advice to India with regard to financing its 5 year plan.

4. Timely Help: India has received timely help from IMF many a time to eliminate the deficit in its balance of payments. India got help from IMF during 1966 in the aftermath of war with Pakistan. It received assistance from IMF for combating oil shock. Between 1980 and 1983 India got assistance from IMF to manage global economic recession.

5. Financial Assistance during Natural Calamity: India has got a lot of financial assistance from IMF to solve the economic crises arising from natural calamities like, floods, famine, earthquake, aggressions of Chinese and Pakistan etc. It gets technical assistance from IMF.

6. Membership in World Bank: By virtue of its membership in IMF India could become member in the World Bank.

7. Help During 1991 Economic Crisis: During 1990, India faced serious economic crisis. Indian Government was almost nearing bankruptcy. It got assistance from IMF by pledging ‘ its gold reserve with it to solve its balance of payments crisis.