Power games that the big boys play

Hindustan Times

08-07-2025

The 2025 World Economic Outlook of the International Monetary Fund (IMF) listed India as the fourth-largest economy in the world with a GDP of $4.187 trillion, pushing Japan to the fifth place. And the World Bank's 2025 Poverty and Equity Brief notes that India has achieved record poverty reduction with the share of those living in extreme poverty (under $2.15 per day) having fallen from 16.2% in 2011-12 to just 2.3% in 2022-23.
Such affirmation should normally have meant only khushi (happiness) with the Bretton Woods Institutions (BWIs). But, it has been kabhi khushi, kabhi gham (sometimes happiness, sometimes sorrow) principally because of their largesse towards Pakistan, overlooking its role in fomenting and spreading terror in India and globally.
Added to this, there has been the termination of the services of our executive director (ED) at IMF at the very moment that matters pertaining to a bailout for Pakistan were coming up. There are allegations he misused his position to get several State-owned banks to buy a book of his in extraordinarily large quantities. There are also reports of his having fallen foul of internal protocols at IMF related to handling of insider information and work methods. The Fund's ethics committee was likely to act, leaving the government with little option other than avoiding the ignominy of its ED facing strictures on ethical issues.
Galling, from India's perspective, was the IMF decision to authorise the release of $1 billion as a financial bailout to Pakistan soon after the Pahalgam terror attack on April 22, despite India's strong protest. A few days later, there were reports of the World Bank agreeing to a 10-year, $40-billion development package for Pakistan. Following this, the Asian Development Bank (ADB) authorised $800 million in early June, again, sidestepping strong criticism by India. Are there lessons for us in these happenings?
The most important one — more so now than earlier, as India climbs the global leadership ladder — is internalising that BWIs are institutions of international governance and not just partners for economic development. Apart from pursuing our domestic development agenda, we must also play the power game of nations.
Second is having a clear understanding of the structure of the BWIs, where voting, unlike in the UN, is not based on a one-country-one-vote system. Rather, as it is in a corporate structure, voting is determined by quotas (analogous to shareholding in a company).
The US has a vote share of around 16.5%, a blocking stake for major decisions which, at IMF, must get a super majority of 85%. Japan and China follow with slightly over 6%. Germany has around 5%, and the UK and France have 4% each, giving, along with others, the Europeans a share of around 25%. India's vote share is 2.6%.
The issue of quota reform has been on the table for years and keeps getting pushed back. There is little doubt that reform will seriously diminish the Europeans. But, from our perspective, though it will bolster our share, it will also hike China's share substantially. This would be difficult for us to stomach politically.
At IMF, there is a 24-member board of executive directors (the World Bank has 25 members), representing the major quota-holders. India, traditionally, has been on these boards, representing a group of four countries — India, Bangladesh, Bhutan and Sri Lanka. These executive boards clear most proposals, but its secretariat, like the management of a company, is a key player. Practically speaking, the executive board must be on board for most operational matters. For matters of strategic importance, this means not only reaching out to board members in Washington and other capitals but also having the secretariat in alignment with your perspective.
As a developing country, India's interest in BWIs has focused on the domestic implications of the latter's actions, especially on helping us with our development priorities. Naturally, the custodian of dealing with these institutions is the ministry of finance. But, with India now vying for a place on the global high table, it is important that the country's representatives in the governance structures of these bodies now not merely push actions that have positive domestic bearings for us but also serve our external relations.
An integrated domestic and external approach is thus an inescapable imperative. A metaphoric Kartavya Path (previously Rajpath) dividing the North Block (where the finance ministry is based) and South Block (where the external affairs ministry is based), must be bridged. For years, the custodian of the government purse (the finance ministry) successfully placed its officers in key Indian diplomatic missions dealing with economic issues. But now, it is time for them to also take in diplomatic expertise both in New Delhi and within the office of our executive directors to the IMF, the World Bank and the ADB. Simultaneously, efforts need to be made to place government officers in BWI secretariats — a tough call as the latter rebuff such efforts by pointing to their own recruitment of the 'best and brightest'. Such recruitment has, of course, seen many Indians rise in these institutions and make us proud. But, for an institution of international governance, 'mine' can't really be substituted by 'good'.
In the past, senior officers of the government with several years of experience with multilateralism in the finance ministry and/or the Reserve Bank of India (RBI) were usually seconded to the posts of EDs. Such choices must now require capabilities not only tuned to batting for India's domestic but also our global agenda. We can't be content with evenness between khushi and gham, but must strive for more khushi and less gham.
Manjeev Puri is former ambassador of India to the European Union and deputy permanent representative of India to the UN. The views expressed are personal.