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03-20-2012, 10:10 AM #1
Euro zone crisis, India's role in global economy top Pranab-Lagarde talks
International Monetary Fund (IMF) managing director Christine Lagarde on Monday met finance minister Pranab Mukherjee and discussed the Euro zone crisis and the new role that emerging countries like India are expected to play in the global economy.
"We particularly discussed the Euro area situation and we also the role of IMF and importance that emerging market economies have to play within the organisation," Lagarde told journalists after meeting Mukherjee.
Lagarde said that she had elaborate discussions on the general economic situation. The IMF managing director's two-day visit to India comes at a time when the European debt turmoil poses a risk to the fragile global economic recovery.
The multilateral agency is also looking to increase its its financial resources with enhanced contributions from emerging majors such as China and India. However, the emerging economies in turn want to have a greater say in the running of both the IMF and the World Bank, both of which are dominated by the US and western Europe.
There has been a convention that that the World Bank chief would be from the US while the IMF managing director's post would be held by a European ever since these two international financial institutions were created after World War II.
However, the emerging economies are of the view that this outdated convention must change to reflect the true international character of these institutions and the changing economic realities.
Currently, the US and European countries command over 50 per cent voting shares in the financial institution.
Mukherjee is reported to have highlighted the fact that the sovereign debt crisis even in Europe has a downside risk of spreading to other countries in today's world of close linkages and Indian exports have also been hit by the slowdown.
Lagarde will be participating in the conference on China and India: Sustaining High Quality Growth here on Tuesday.