What the World Bank did
The Development Committee of the World Bank, in its meeting on April 25, 2010, at Washington DC, implemented an overall shift of three per cent vote share to developing countries, bringing their total vote share to 47 per cent. India is now the seventhlargest shareholder in the Bank with 2.91 per cent voting rights up from the earlier 2.77 per cent.
As a result, India will go ahead of Russia, Canada, Australia, Italy and Saudi Arabia in voting power. Still, India would lag behind China in voting power as the world's fastest-growing economy's shareholding jumped from 2.77 to 4.42 per cent, the third-largest globally, after the US (15.85 per cent) and Japan (6.84 per cent).
Why this was done
The global financial crisis has brought to the fore the need to give greater representation to emerging market economies in multilateral institutions. "Today, we are in a new, fast-evolving, multi-polar world economy. Economic and political tectonic plates are shifting. We can shift with them, or we can continue to see the world through the prism of the old. We must recognise these new realities and act on them," Robert Zoellick, President, World Bank, said in a statement.
What else was done
The Development Committee also agreed to raise the capital base of the Bank through a general capital increase. The authorised capital of the Bank will be raised by $58 billion, with a paid-in portion at six per cent 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, will allow the Bank to lend an additional $86 billion.
How India will benefit
The increase in India's voting share reflects the country's growing place in the global economy. However, N. Roberto Zagha, Country Director (India), World Bank, had a word of caution. "This by itself will not ensure India's greater access to lending by the Bank. That is determined by the Bank's total capital and is not on the basis of distribution of voting rights," he told BT. What the increase in voting rights will do, adds Zagha, is to increase India's voice in the Board of the Bank.