Abstract
Since the Breton Woods and the emergence of the International Monetary Fund (IMF) in 1947, developed countries had an upper hand in the dynamics of international financial management. The IMF has claimed to add insights about the developing and under-developed countries development. All over the world, the growth trajectory of the developing nations has been affected by the policies and procedures of the IMF. India got independence in the year 1947 and became an IMF signatory in the year 1945. Since then, India has been involved in the economic management on the parameters of the IMF. The growth story of India is a mixed response yet a success story until now. The recent phase of opening up the economy that started in 1991 has had a great impact on the growth trajectory of Indian economy. The present study aims to study the growth pattern of India and the economic reforms pushed by the IMF. Gross Domestic Product (GDP) and Current Account are considered as two variables for the study. Moreover, identification of structural breaks for Indian economy is performed with the use of econometric techniques.
Highlights
International Monetary Fund (IMF) came into existence with the Breton Woods Agreement in 1945
To estimate Gross Domestic Product (GDP) is regressed with a constant intercept while ignoring the presence of any endogenous parameter.The trimming is set at 15%, which indicates that the regimes are restricted to have at least 15% of the observations at a time
The study has identified the linkages between economic growth of India and the reforms pushed by the IMF.There is substantial evidence for the key role played by the IMF in the liberalization of India in 1991.The GDP growth trend in India has remained positive
Summary
International Monetary Fund (IMF) came into existence with the Breton Woods Agreement in 1945. India got independence in 1947 and started its growth gradually; the vacuum created owing to it being a newly independent country affected it severely. The growth and liberalization in India were gradual, but the economy remained a closed one. Became a mixed economy with the components of both capitalism and socialism. The major liberalization emerged in the year 1991 with the standing arrangement made by the IMF for India. The IMF concerns were related to further liberalizing the economy while ending the license raj regime.The present study attempts to capture growth evolution of India and its dynamics with the IMF.
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