The Evolution of ‘Homegrown Conditionality’ in India: IMF Relations

Abstract

This article explores the historical relationship between the Government of India (GOI) and the International Monetary Fund (IMF) as a successful model for the ways in which a developing country can learn to work with and through multilateral organisations to promote economic and political development while sustaining democratic institutions and relative international political autonomy. In the mid-1960s, India's relations with the USA, IMF, and World Bank were strained after an attempt by these institutions to exert ‘leverage’ over Indian economic policies was exposed to parliamentary debate and the scrutiny of a free press. By the late 1970s, the GOI charted a new course in its interaction with the IMF. In 1981, India was awarded the largest IMF loan to a developing country up to that time. This article will evaluate India's economic reform strategy in the early 1980s and explain the development of the concept of ‘homegrown conditionality’ within the GOI.