8. The Developing Nations and International Scene

WE ARE MEETING this year at a time when the machinery for inter­national economic cooperation that we have built up so patiently over the past 25 years or so is under considerable stress and strain. There is talk of revising the IMF Charter and even of holding another Bretton Woods Conference. The third replenish­ment of IDA is heading for the same fate as the second one. The third UNCTAD conference will take place soon without any tangible evidence that the objectives of the second UNCTAD have been achieved to any significant extent. In the field of trade, recent events have cast a shadow on the effectiveness of the GATT and on the prospects for the general scheme of pre­ferences. Within our own family of the Commonwealth, the United Kingdom seems to be all but set for membership of the European Economy Community.

If ever there was any purpose in a meeting of the Common­wealth Finance Ministers, it is on this occasion when so many deci­sions in the international economic field are imminent. I would like, therefore, to devote my remarks even at this stage to some aspects of the machinery for international economic cooperation about which we, in India, and I am sure in most other developing countries, feel seriously concerned. I will add towards the end a few remarks on the current economic situation in India. We have before us excellent reviews of the world economic situation as it affects the developed and the developing countries respectively, and I do not wish to comment on what is admirably stated in these papers. But there are overriding issues concerning the relationship between the two groups of countries which deserve to be noted at the outset.

There has been a great deal of questioning of late of the emphasis in the IMF Charter on stability of exchange rates and orderly changes in them. We in India are not averse to a greater degree of flexibility being introduced in the system and to any extensive realignment of exchange rates in the present situation. Indeed, we are not averse to the whole IMF Charter being sub­jected to a detailed review with a view to radical reform. But we do feel that if there is to be a change whether in the present alignment of currencies or in the basic tenets of the IMF Charter, these changes must be made within the four corners of the Fund and not for all practical purposes in a group of 6 or 10 or 16, however wealthy and powerful it may be. You cannot have a spectacle of the wealthy and the powerful deciding things on their own without impairing the image and effectiveness of the institution we have nourished and nurtured over so many years.