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Last Updated: Monday, 30 June, 2003, 11:46 GMT 12:46 UK
India becomes IMF lender
Indian soldier
India believes its weight could earn it a place on the UN Security Council
India is joining the ranks of countries who contribute to the International Monetary Fund's (IMF's) reserve for bailing out poor nations in financial trouble.

According to the Reserve Bank of India, the country's central bank, India's healthy foreign currency reserves and the strength of its balance of payments have meant it qualifies to join the programme.

The move, the bank said, marked the switch from a decades-old reputation as a serial borrower from international financial bodies.

"With this development, India has become a creditor to the IMF," the bank said in a statement.

India allotted 205m Special Drawing Rights - the IMF's currency - or almost $300m (182m) to the IMF in two transfers in May and June.

India is fighting to raise its profile in international organisations, in the hope that its massive population and regional sway will help it qualify for a seat on the United Nations Security Council.

Off the hook

It is now three years since India paid off the last of its debts to the IMF.

The bulk of its debt stemmed from a $2.5bn loan requested in 1991, which was needed to cope with a sudden outflow of funds as expatriate Indians withdrew their money and a rise in oil prices hampered the economy.

Since then, though, the country's main indices of financial health have been in the black.

Foreign currency reserves, for example, total more than $80bn.

Growth has picked up, averaging 5% a year in recent - although the 2002-2003 financial year saw the economy expand just 4.3% as a punishing drought ate into agricultural production.

The IMF itself has cast some doubt on whether India's undoubted economic recovery is enough to deal with the poverty which still dogs many of the country's one billion people.

The IMF said earlier this year that growth needed to reach 8% in order to reduce poverty.

And it pointed out that although India is free of debt to the IMF, its obligations to other countries and to the international financial markets amounted to 80% of gross domestic product.

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