By Arun Kumar
Washington, April 27 (IANS) Historic decisions taken by the World Bank to increase the financial capacity of the Bank and give more voice to the developing countries would greatly benefit India both as a borrower and a shareholder, Indian officials said.
The decisions taken by the policymaking Development Committee of the World Bank here Sunday would make India one of the important shareholders in the Bank with the 7th largest voting rights ahead of Russia, Canada, Australia, Italy and Saudi Arabia.
India's voting power, which had been declining since the 1970s, has gone up from 2.77 percent to 2.91 percent, reversing a trend for the first time in a generation. China's share too has soared to 4.42 percent from 2.77 percent.
These changes reflect the rapid growth of the Indian economy in the past decade and its rising economic weight in global affairs, officials said.
The overall shift of a little over 3 percent vote share to developing countries bringing their total vote share to 47 percent comes in recognition of the global economic changes.
The voting power of Brazil, Indonesia, Mexico and Turkey has also increased, while that of some of the major European and other countries that have traditionally dominated international finance like UK, France, Germany, the Nordic and Benelux countries, Japan, Australia and Canada, has gone down.
The Bank has also agreed to review its shareholding five years hence and as India's economy grows further, this should lead to a further improvement in India's relative importance, officials said.
The Development Committee also agreed to raise the capital base of the Bank through a General Capital Increase after a gap of over 30 years. With this the authorised capital of the Bank would go up by $58 billion with a paid in portion at 6 percent amounting to $3.5 billion.
The increase in its capital base, along with the capital that would flow in as a result of the realignment in shareholding, would allow the Bank to lend an additional $86 billion.
As one of the largest borrowers of the Bank, India also would be able to secure additional assistance from the Bank. The enhanced lending capacity would enable India to receive additional assistance to the extent of $7-10 billion in the coming years.
Hailing the decision at Sunday's meeting Indian Finance Secretary Ashok Chawla said that these changes "are transformative in nature and will reposition the World Bank Group in the international financial architecture."