GLOBAL & NATIONAL ECONOMIC INSTITUTIONS

SUBMITTED TO DR.SUBIA KHAN DEPARTMENT OF SOCIA JAMIA MILIA ISLAMIA NEW DELHI

SUBMITTED BY MOHD NASEEM CHAUDHRY M.A(HRM)2ND SEMESTER DEPARTMENT OF SOCIAL WORK

GLOBAL ECONOMIC INSTITUTIONS

INTRODUCTION Specialized institutions with narrowly defined mandates flourish in various fields of international law. Global economic institutions (GEIs) such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO) have been among the most influential. The main source of their influence is that the GEIs are often equipped with effective tools to enforce rules and policies. For example, the World Bank and the IMF may impose conditions on their loans while the WTO has a compulsory dispute settlement system. The enforcement of their rules and policies not only affects inter-state relations among the member countries but also, and more often, forces the modification of the members' domestic policies. Because of the growing impact of the latter, these institutions are occasionally criticized for unduly restricting the autonomy of the member countries' decision-making processes. Interestingly enough, the critics do not necessarily argue that the GEIs should not influence the domestic policies of the members at all; rather, the criticism concerns how they should do so. The criticism is twofold. First, critics express a concern over the democratic deficit of the institutions in view of the lack of procedures in place to reflect the voices of all stakeholders, including state and non-state actors. They argue that no institution should enforce rules and policies that are formulated in the absence of those potentially affected by these rules and policies.

The General Agreement on Tariffs and Trade (typically abbreviated GATT)

was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was formed in 1949 and lasted until 1993. WHY WAS GATT ESTABLISHED?

GATT, was established on a provisional basis after the Second World War in the wake of other new multilateral institutions dedicated to international economic cooperation notably the "Bretton Woods" institutions now known as the World Bank and the International Monetary Fund. The original 23 GATT countries were among over 50 which agreed a draft Charter for an International Trade Organization (ITO) - a new specialised agency of the United Nations. The Charter was intended to provide not only world trade disciplines but also contained rules relating to employment, commodity agreements, restrictive business practices, international investment and services. In an effort to give an early boost to trade liberalization after the Second World War - and to begin to correct the large overhang of protectionist measures which remained in place from the early 1930s - tariff negotiations were opened among the 23 founding GATT "contracting parties" in 1946. This first round of negotiations resulted in 45,000 tariff concessions affecting $10 billion - or about one-fifth - of world trade. It was also agreed that the value of these concessions should be protected by early - and largely "provisional" - acceptance of some of the trade rules in the draft ITO Charter. The tariff concessions and rules together became known as the General Agreement on Tariffs and Trade and entered into force in January 1948. Although the ITO Charter was finally agreed at a UN Conference on Trade and Employment in Havana in March 1948 ratification in national legislatures proved impossible in some cases. When the United States' government announced, in 1950, that it would not seek congressional ratification of the Havana Charter, the ITO was effectively dead. Despite its provisional nature, the GATT remained the only multilateral instrument governing international trade from 1948 until the establishment of the WTO. Although, in its 47 years, the basic legal text of the GATT remained much as it was in 1948, there were additions in the form of "plurilateral" voluntary membership, agreements and continual efforts to reduce tariffs. Much of this was achieved through a series of "trade rounds".

WHAT ARE THE OBJECTIVES AND FUNCTIONS OF GATT?

The basic aim of the GATT is to liberalize world trade and place it on a secure basis, contributing to economic growth and development. Established in 1948, the GATT is the only multilateral organization that lays down agreed-upon rules for international trade. It also functions as the principal international body concerned with multilaterally negotiating the reduction of trade barriers and other measures that distort competition. So GATT is both a code of rules and a forum in which countries can discuss and resolve their trade disputes and negotiate to enlarge world trading opportunities. The GATT organization is headquartered in Geneva, Switzerland, and has a permanent staff to help interpret its trade rules, monitor members' policies, settle disputes and conduct trade negotiations. Since its inception, countries have used the GATT to initiate rounds of negotiations to deal with the major problems of international trade. Over its history, the GATT has sponsored eight rounds of multilateral trade negotiations. The early rounds addressed key trade policy issues of their time, namely the reduction of tariffs on industrial goods and the establishment of clear rules for governmental regulation of world trade. Significant progress was made in both of these areas, but the rules provided special provisions for agriculture that limited the effectiveness of GATT disciplines. In the 1960s, attempts were made to bring agriculture and other sectors beyond manufacturing under GATT discipline, as well as to address the emergence of nontariff barriers to trade. The Dillon Round (1 960-62) concluded without significant progress in agriculture, except that the United States gained duty-free bindings on soybeans, linseed, flaxseed, oilseed meal and cotton into the European Community (EC), which as of 1994 is referred to as the European Union (EU). These commitments from the EC were of tremendous importance to U.S. agriculture. In 1963-67, the Kennedy Round attempted to liberalize trade in agriculture, and the differences between the two big players were clear: The United States wanted to bring agriculture under the rules applicable to industrial products; the EC wanted to exclude it. The round resulted in the creation of the International Wheat Council and some small tariff concessions on agricultural products. In 1973-79, the Tokyo Round again tackled agriculture, and again the United States and the EC were on opposite sides. The United States wanted agriculture included under the same disciplines as the industrial sector; the EC wanted it separate. While no pact was

reached on agriculture, the Tokyo Round achieved several codes on subsidies, import licensing and technical standards applicable to agricultural trade. The Uruguay Round (1986-94) was the most ambitious round of GATT negotiations. It began in the face of an increasing number of serious problems with agricultural trade. Subsidy-induced overproduction by some countries led to an increased use of export subsidies, which were displacing efficient producers from their traditional export markets. At the same time, nontariff barriers were increasingly being used to distort trade. Other sectors of the world economy also needed international discipline, including services, patents (and other intellectual property rights) and textiles. Negotiators recognized that comprehensive trade reform was needed, with agriculture at the forefront.

CRITICAL EVALUATION OF THE SUCCESS OF GATT

Given its provisional nature and limited field of action, the success of GATT in promoting and securing the liberalization of much of world trade over 47 years is incontestable. Continual reductions in tariffs alone helped spur very high rates of world trade growth - around 8 per cent a year on average - during the 1950s and1960s. And the momentum of trade liberalization helped ensure that trade growth consistently out-paced production growth throughout the GATT era. The rush of new members during the Uruguay Round demonstrated that the multilateral trading system, as then represented by GATT, was recognized as an anchor for development and an instrument of economic and trade reform. The limited achievement of the Tokyo Round, outside the tariff reduction results, was a sign of difficult times to come. GATT's success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased overseas competition. High rates of unemployment and constant factory closures led governments in Europe and North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade. Both these changes undermined the credibility and effectiveness of GATT. Apart from the deterioration in the trade policy environment, it also became apparent by the early 1980s that the General Agreement was no longer as relevant to the realities of world trade as it had been in the 1940s. For a start, world trade had become far more complex and important than 40 years before: the globalization of the world economy was underway, international investment was exploding and trade in services - not covered by the rules of GATT - was of major interest to more and more countries and, at the same time, closely tied to further increases in world merchandise trade. In other respects, the

GATT had been found wanting: for instance, with respect to agriculture where loopholes in the multilateral system were heavily exploited - and efforts at liberalizing agricultural trade met with little success - and in the textiles and clothing sector where an exception to the normal disciplines of GATT was negotiated in the form of the Multifibre Arrangement. Even the institutional structure of GATT and its dispute settlement system were giving cause for concern. The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. WHY WAS THE WTO ESTABLISHED?

GATT and the WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth. The system was developed through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures. The last round the 1986-94 Uruguay Round led to the WTOs creation. The WTO has nearly 150 members, accounting for over 97% of world trade. Around 30 others are negotiating membership. Decisions are made by the entire membership. This is typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTOs predecessor, GATT. The WTOs agreements have been ratified in all members parliaments. The WTOs top level decision-making body is the Ministerial Conference which meets at least once every two years. Below this is the General Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members capitals) which meets several times a year in the Geneva headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body. At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council report to the General Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements.

WHAT ARE THE OBJECTIVES AND FUNCTIONS OF THE WTO?

The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland. Among the various functions of the WTO, these are regarded by analysts as the most important:

It oversees the implementation, administration and operation of the covered agreements. It provides a forum for negotiations and for settling disputes.

Additionally, it is the WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training. The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: 1. Non-Discrimination. It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members. "Grant someone a special favour and you have to do the same for all other WTO members." National treatment means that imported goods should be treated no less favorably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported goods). 2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the

gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialise. 3. Binding and enforceable commitments. The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures. 4. Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic countryspecific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports. 5. Safety valves. In specific circumstances, governments are able to restrict trade. There are three types of provisions in this direction: articles allowing for the use of trade measures to attain noneconomic objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade for economic reasons. Exceptions to the MFN principle also allow for preferential treatment of developed countries, regional free trade areas and customs unions The WTOs overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by:

Administering trade agreements Acting as a forum for trade negotiations Settling trade disputes Reviewing national trade policies Assisting developing countries in trade policy issues, through technical assistance and training programmes

The International Monetary Fund (IMF) is the intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. Its headquarters are in Washington, DC., United States WHY WAS THE IMF ESTABLISHED?

The International Monetary Fund was conceived in July 1944 originally with 45 members and came into existence in December 1945 when 29 countries signed the agreement, with a goal to stabilize exchange rates and assist the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. The IMF was important when it was first created because it helped the world stabilize the economic system. The IMF works to improve the economies of its member countries. The IMF describes itself as "an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". After the First World War, most of the countries of the world were of the opinion that monetary cooperation was necessary to get the economic stability at international level. But the world wide depression in 1930 and the fall of gold standard system in 1931 gave rise to a number of problems in exchange rates, The second world war also became the reason of cancellation of a trade pact among powerful countries (America, England and France). Due to the multiple exchange rate practices, difficulties arose in international trade and it was felt that without monetary cooperation, economic development was not possible, A well known British Economist, John Maynard Keynes and the American expert Harry D. White prepared their separate plans for International Clearing Union and 'United and Associated Nations Stabilisation Fund' respectively. The basic features of these plans were fused into a common plan evolved at the United Nations Monetary and Financial Conference of 44 nations held at Bretton Woods, New Hampshire in the U.S.A. in July 1944. This conference gave birth to the 'International Monetary Fund' and the International Bank for Reconstruction and Development (World Bank).

WHAT ARE THE OBJECTIVES AND FUNCTIONS OF THE IMF? IMF is an organization formed with a stated objective of stabilizing international exchange rates and facilitating development through the enforcement of liberalising economic policies on other countries as a condition for loans, restructuring or aid. It also offers loans with varying levels of conditionality, mainly to poorer countries. The work of the IMF is of three main types. Surveillance involves the monitoring of economic and financial developments, and the provision of policy advice, aimed especially at crisis-prevention. The IMF also lends to countries with balance of payments difficulties, to provide temporary financing and to support policies aimed at correcting the underlying problems; loans to low-income countries are also aimed especially at poverty reduction. Third, the IMF provides countries with technical assistance and training in its areas of expertise. Supporting all three of these activities is IMF work in economic research and statistics. In recent years, as part of its efforts to strengthen the international financial system, and to enhance its effectiveness at preventing and resolving crises, the IMF has applied both its surveillance and technical assistance work to the development of standards and codes of good practice in its areas of responsibility, and to the strengthening of financial sectors. The IMF also plays an important role in the fight against money-laundering and terrorism

The main objective of IMF is to grant loans in foreign currencies to member countries to correct any disequilibrium in their balance of payments, when disequilibrium is of temporary nature and likely to be removed in the earliest possible period. According to the Article 1st of the agreement, the objectives of the IMP are(i) To promote international monetary cooperation through a permanent institution of the fund which provides the machinery for Consultation and Collaboration on international monetary problems? (ii) To facilitate the expansion and balanced growth of international trade and to contribute thereby to the promotion and maintenance of high level of employment and real income; (iii) To promote exchange stability and maintain orderly exchange arrangements among members by avoiding competitive exchange depreciation; (iv) To assist in the establishment of a multi-lateral system of payments in respect of current transactions between members and elimination of foreign exchange restrictions which hamper the growth of world trade. (v) To create confidence among members by making the general resources of the fund temporarily available to them and providing opportunity to correct mal-adjustments in their balance of payments without resorting to the measures destructive of national or international prosperity.

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CRITICAL EVALUATION OF IMFS SUCCESS A number of civil society organizations have criticized the IMF's policies for their impact on people's access to food, particularly in developing countries. In October 2008, former US President Bill Clinton joined this chorus in a speech to the United Nations World Food Day, which criticized the World Bank and IMF for their policies on food and agriculture: We need the World Bank, the IMF, all the big foundations, and all the governments to admit that, for 30 years, we all blew it, including me when I was President. We were wrong to believe that food was like some other product in international trade, and we all have to go back to a more responsible and sustainable form of agriculture. Former US President Bill Clinton, Speech at United Nations World Food Day, October 16, 2008 In 2008, a study by analysts from Cambridge and Yale universities published on the open-access Public Library of Science concluded that strict conditions on the international loans by the IMF resulted in thousands of deaths in Eastern Europe by tuberculosis as public health care had to be weakened. In the 21 countries to which the IMF had given loans, tuberculosis deaths rose by 16.6%. In 2009, a book by Rick Rowden titled, The Deadly Ideas of Neoliberalism: How the IMF has Undermined Public Health and the Fight Against Aids, claimed that the IMF's monetarist approach towards prioritizing price stability (low inflation) and fiscal restraint (low budget deficits) was unnecessarily restrictive and has prevented developing countries from being able to scale up long-term public investment as a percent of GDP in the underlying public health infrastructure. The book claimed the consequences have been chronically underfunded public health systems, leading to dilapidated health infrastructure, inadequate numbers of health personnel, and demoralizing working conditions that have fueled the "push factors" driving the brain drain of nurses migrating from poor countries to rich ones, all of which has undermined public health systems and the fight against HIV/AIDS in developing countries. IMF policies have been repeatedly criticized for making it difficult for indebted countries to avoid ecosystem-damaging projects that generate cash flow, in particular oil, coal and forest-destroying lumber and agriculture projects. Ecuador for example had to defy IMF advice repeatedly in order to pursue the protection of its rain forests, though paradoxically this need was cited in IMF argument to support that country. The IMF acknowledged this paradox in a March 2010 staff position report which proposed the IMF Green Fund, a mechanism to issue Special Drawing Rights directly to pay for climate harm prevention and potentially other ecological protection as pursued generally by other environmental finance.

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While the response to these moves was generally positive possibly because ecological protection and energy and infrastructure transformation are more politically neutral than pressures to change social policy. Some experts voiced concern that the IMF was not representative, and that the IMF proposals to generate only 200 billion dollars/year by 2020 with the SDRs as seed funds, did not go far enough to undo the general incentive to pursue destructive projects inherent in the world commodity trading and banking systems - criticisms often levelled at the WTO and large global banking institutions. In the context of the May 2010 European banking crisis, some observers also noted that Spain and California, two troubled economies within Europe and the United States respectively, and also Germany, the primary and politically most fragile supporter of a Euro currency bailout would benefit from IMF recognition of their leadership in green technology, and directly from Green-Fund generated demand for their exports, which might also improve their credit standing with international bankers.

The World Bank is an international financial institution that provides loans to developing countries for capital programmes. The World Bank has a goal of reducing poverty. By law, all of its decisions must be guided by a commitment to promote foreign investment, international trade and facilitate capital investment. The World Bank comprises two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

WHY WAS THE WORLD BANK ESTABLISHED? The World Bank has dual roles that are contradictory: that of a political organization and that of a practical organization. As a political organization, the World Bank must meet the demands of donor and borrowing governments, private capital markets, and other international organizations. As an action-oriented organization, it must be neutral, specializing in development aid, technical assistance, and loans. The World Bank's obligations to donor countries and private capital markets have caused it to adopt policies which dictate that poverty is best alleviated by the implementation of "market" policies. The World Bank was created in 1944 to lend to primarily European countries that had been destroyed in the war to help them rebuild. It evolved from the International Bank for Reconstruction and Development (IBRD). The World Bank was based in Washington, D.C., and was primarily staffed with engineers. Since then, it has expanded to a closely associated group of five development institutions whose purpose is to reduce worldwide poverty. It operates closely with its affiliate, the International Development Association, and other members of the World Bank Group, the International Finance Corporation (IFC), the Multilateral Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID).

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WHAT ARE THE OBJECTIVES AND FUNCTIONS OF THE WORLD BANK?

From its conception until 1967 the bank undertook a relatively low level of lending. Fiscal conservatism and careful screening of loan applications was common. From 1968 to 1980, the bank concentrated on meeting the basic needs of people in the developing world. The size and number of loans to borrowers was greatly increased as loan targets expanded from infrastructure into social services and other sectors. Lending to service third world debt marked the period of 19801989. Structural adjustment policies aimed at streamlining the economies of developing nations (at the expense of health and social services) were also a large part of World Bank policy during this period. From 1989, World Bank policy changed in response to criticism from many groups. Environmental groups and NGOs were incorporated in the lending of the bank in order to mitigate the effects of the past that prompted such harsh criticism. The World Bank provides low-interest loans, interest-free credits and grants to developing countries. In return, the country must adhere to strict budgetary reforms. It must agree to cut back on spending and support its currency. The World Bank loans are usually to invest in education, health, and infrastructure. The loans can also be used to modernize a country's financial sector, agriculture, and natural resource management. The goals of this international organization include:

Achievement of the Millennium Development Goals. Increase lending to middle-income countries. Develop and forward easily payable interest rates. Generate low or no interest loans to under-developed countries. Increase periodic grant-investments by member countries.

The Bank provides analytical services for economic and social infrastructural improvements. It also encourages innovation and cooperation between local stakeholders to generate:

Debt relief in the case of very poor countries. Development of sanitation and water supply. Support immunization programs during epidemics. Create 'green' initiatives.

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CRITICAL EVALUATION OF THE WORLD BANKS SUCCESS

The World Bank has long been criticized by non-governmental organizations, such as the indigenous rights group Survival International, and academics, including its former Chief Economist Joseph Stiglitz who is equally critical of the International Monetary Fund, the US Treasury Department, US and other developed country trade negotiators. Critics argue that the so-called free market reform policies which the Bank advocates are often harmful to economic development if implemented badly, too quickly ("shock therapy"), in the wrong sequence or in weak, uncompetitive economies. In Masters of Illusion: The World Bank and the Poverty of Nations (1996), Catherine Caufield argued that the assumptions and structure of the World Bank harms southern nations. Caufield criticized its formulaic recipes of "development". To the World Bank, different nations and regions are indistinguishable and ready to receive the "uniform remedy of development". She argued that to attain even modest success, Western practices are adopted and traditional economic structures and values abandoned. A second assumption is that poor countries cannot modernize without money and advice from abroad. A number of intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO imperialism, and that its intellectual contributions function to blame the poor for their condition. One of the strongest criticisms of the World Bank has been the way in which it is governed. While the World Bank represents 186 countries, it is run by a small number of economically powerful countries. These countries choose the leadership and senior management of the World Bank, and so their interests dominate the bank. The World Bank has dual roles that are contradictory: that of a political organization and that of a practical organization. As a political organization, the World Bank must meet the demands of donor and borrowing governments, private capital markets, and other international organizations. As an action-oriented organization, it must be neutral, specializing in development aid, technical assistance, and loans. The World Bank's obligations to donor countries and private capital markets have caused it to adopt policies which dictate that poverty is best alleviated by the implementation of "market" policies. In the 1990s, the World Bank and the IMF forged the Washington Consensus, policies which included deregulation and liberalization of markets, privatization and the downscaling of government. Though the Washington Consensus was conceived as a policy that would best promote development, it was criticized for ignoring equity, employment and how reforms like privatization were carried out. Many now agree that the Washington Consensus placed too much emphasis on the growth of GDP, and not

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enough on the permanence of growth or on whether growth contributed to better living standards. Some analysis shows that the World Bank has increased poverty and been detrimental to the environment, public health and cultural diversity. Some critics also claim that the World Bank has consistently pushed a neoliberal agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental. It has also been suggested that the World Bank is an instrument for the promotion of US or Western interests in certain regions of the world. South American nations have even established the Bank of the South in order to reduce US influence in the region.Criticism of the bank, that the President is always a citizen of the United States, nominated by the President of the United States (though subject to the "approval" of the other member countries). There have been accusations that the decision-making structure is undemocratic as the US has a veto on some constitutional decisions with just over 16% of the shares in the bank; Decisions can only be passed with votes from countries whose shares total more than 85% of the bank's shares. A further criticism concerns internal management and the manner in which the World Bank is said to lack accountability. Criticism of the World Bank often takes the form of protesting as seen in recent events such as the World Bank Oslo 2002 Protests, the October Rebellion, and the Battle of Seattle. Such demonstrations have occurred all over the world, even amongst the Brazilian Kayapo people. In 2008, a World Bank report which found that biofuels had driven food prices up 75% was not published. Officials confided that they believed it was suppressed to avoid embarrassing the then-President of the United States, George W. Bush. Although controversial and far from proven, there is criticism that World Bank and IMF are used as a means to fulfill business (interests of large corporations to enter the natural resource markets of the country and obtain the legal guarantees that it can stay there) or political needs of the main IMF donors (mostly USA), that were previously historically obtained by more direct activity - war, economic blockade, espionage. See for example Confessions of an Economic Hit Man.

The Asian Development Bank (ADB) is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia. The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly known as the United Nations Economic Commission for Asia and the Far East) and non-regional developed countries. From 31 members at its establishment, ADB now has 67 members - of which 48 are from within Asia and the Pacific and 19 outside.

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WHY WAS THE ADB ESTABLISHED?

ADB was originally conceived by some influential Japanese who formulated a "private plan" for a regional development bank in 1962, which was later endorsed by the government. The Japanese felt that its interest in Asia was not served by the World Bank and wanted to establish a bank in which Japan was institutionally advantaged. Once the ADB was founded in 1966, Japan took a prominent position in the bank; it received the presidency and some other crucial "reserve positions" such as the director of the administration department. By the end of 1972, Japan contributed $173.7 million (22.6% of the total) to the ordinary capital resources and $122.6 million (59.6% of the total) to the special funds. In contrast, the United States contributed only $1.25 million for the special fund. The ADB served Japan's economic interests because its loans went largely to Indonesia, Thailand, Malaysia, South Korea and the Philippines, the countries with which Japan had crucial trading ties; these nations accounted for 78.48% of the total ADB loans in 196772. Moreover, Japan received tangible benefits, 41.67% of the total procurements in 1967-76. Japan tied its special funds contributions to its preferred sectors and regions and procurements of its goods and services, as reflected in its $100 million donation for the Agricultural Special Fund in April 1968.

ADB was conceived amid the postwar rehabilitation and reconstruction of the early 1960s. The vision was of a financial institution that would be Asian in character and foster economic growth and cooperation in the region - then one of the poorest in the world. A resolution passed at the first Ministerial Conference on Asian Economic Cooperation held by the United Nations Economic Commission for Asia and the Far East in 1963 set that vision on the way to becoming reality. The Philippines capital of Manila was chosen to host the new institution - the Asian Development Bank - which opened on 19 December 1966, with 31 members to serve a predominantly agricultural region.

WHAT ARE THE OBJECTIVES AND FUNCTIONS OF THE ADB? ADB continues to promote economic growth, develop human resources, improve the status of women, and protect the environment, but these strategic development objectives now serve its poverty reduction agenda. Its other key development objectives, such as law and policy reform, regional cooperation, private-sector development, and social development, also contribute significantly to this main goal.

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Stakeholder's input ADB consulted its various stakeholders central and local governments, nongovernment organizations, the academic community, development agencies, and funding agencies in preparing its poverty reduction strategy. Two- and three-day workshops were held for this purpose in Bangladesh, People's Republic of China, India, Indonesia, Kyrgyz Republic, Nepal, Philippines, Sri Lanka, and Viet Nam. Consultations were also held over the Internet.The consultations identified lessons learned from poverty reduction efforts in each country, examined emerging strategies, and expored ways in which the new ADB strategy could best support national efforts and priorities. To fulfill its purpose, the Bank has the following functions: i. ii. to promote investment in the region of public and private capital for development purposes; to utilize the resources at its disposal for financing development of the developing member countries in the region, giving priority to those regional, sub-regional as well as national projects and programmes which will contribute most effectively to the harmonious economic growth of the region as a whole, and having special regard to the needs of the smaller or less developed member countries in the region; to meet requests from members in the region to assist them in the coordination of their development policies and plans with a view to achieving better utilization of their resources, making their economies more complementary, and promoting the orderly expansion of their foreign trade, in particular, intra-regional trade; to provide technical assistance for the preparation, financing and execution of development projects and programmes, including the formulation of specific project proposals; to co-operate, in such manner as the Bank may deem appropriate, within the terms of this Agreement, with the United Nations, its organs and subsidiary bodies including, in particular, the Economic Commission for Asia and the Far East, and with public international organizations and other international institutions, as well as national entities whether public or private, which are concerned with the investment of development funds in the region, and to interest such institutions and entities in new opportunities for investment and assistance; and to undertake such other activities and provide such other services as may advance its purpose.

iii.

iv.

v.

vi.

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CRITICAL EVALUATION OF ADBS SUCCESS

Since the ADB's early days, critics have charged that the two major donors, Japan and the United States, have had extensive influence over lending, policy and staffing decisions. Oxfam Australia has criticized the Asian Development Bank of insensitivity to local communities. "Operating at a global and international level, these banks can undermine people's human rights through projects that have detrimental outcomes for poor and marginalized communities." The bank also received criticism from the United Nations Environmental Program, stating in a report that "much of the growth has bypassed more than 70 percent of its rural population, many of whom are directly dependent on natural resources for livelihoods and incomes." There had been criticism that ADB's large scale projects cause social and environmental damage due to lack of oversight. One of the most controversial ADB-related projects is Thailand's Mae Moh coal-fired power station. Environmental and human rights activists say ADB's environmental safeguards policy as well as policies for indigenous people and involuntary resettlement, while usually up to international standards on paper, are often ignored in practice, are too vague or weak to be affective, or are simply not enforced by bank officials. The bank has been criticized over its role and relevance in the food crisis.The ADB has been accused by civil society of ignoring warnings leading up the crisis and also contributing to it by pushing loan conditions that many say unfairly pressure governments to deregulate and privatize agricultureleading to problems such as the rice supply shortage in Southeast Asia. The bank has also been criticized by Vietnam War veterans for funding projects in Laos, because of the United States' 15% stake in the bank, underwritten by taxes. Laos became a communist country after the U.S. withdrew from Vietnam and the Laotian Civil War was won by the Pathet Lao, which is widely understood to have been supported by the North Vietnamese Army. In 2009, the bank endorsed a 2.9-billion-dollar funding strategy for proposed projects in India. The projects in this strategy were only indicative and still needed to be further approved by the bank's Board of Directors; however, PRC Foreign Ministry spokesman Qin Gang claimed, "The Asian Development Bank, regardless of the major concerns of China, approved the India Country Partnership strategy which involves the territorial dispute between China and India. China expresses its strong dissatisfaction over this... The bank's move not only seriously tarnishes its own name, but also undermines the interests of its members."

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The Association of Southeast Asian Nations, commonly abbreviated ASEAN is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its aims include the acceleration of economic growth, social progress, cultural development among its members, the protection of the peace and stability of the region, and to provide opportunities for member countries to discuss differences peacefully. ASEAN was formed as a result of the Bangkok Declaration of 1967 and initially had five members: Thailand, Malaysia, Indonesia, the Philippines and Singapore. Brunei subsequently joined in 1984 after it had won independence from Britain. Vietnam became the seventh member of the group, officially joining in 1995. After several years of negotiation, Burma (Myanmar) and Laos joined in 1997 and the final member of the ten, Cambodia, became a member in 1999. The only independent state in Southeast Asia which is not a member of ASEAN is now East Timor, which is still at too vulnerable and fragile a state to be able to participate for the foreseeable future. WHY WAS THE ASEAN ESTABLISHED? The motivations for the birth of ASEAN were so that its members governing elite could concentrate on nation building, the common fear of communism, reduced faith in or mistrust of external powers in the 1960s, as well as a desire for economic development; not to mention Indonesias ambition to become a regional hegemony through regional cooperation and the hope on the part of Malaysia and Singapore to constrain Indonesia and bring it into a more cooperative framework. The Association of Southeast Asian Nations (ASEAN) is a multilateral organization which was created to give Southeast Asian states a forum to communicate with each other. Since the region had a long colonial past and a history of endemic warfare, there has never been much peaceful and constructive interaction between kings, presidents and other officials. In the 1950s, Vietnam, Laos and Cambodia were fighting for independence from the French and, later, the USA. This put those countries at enmity with western-leaning countries such as Thailand, Philippines and Singapore. Malaysia and Indonesia, meanwhile, had their own konfrontasi and prickly relations (at best) existed, while Singapore and Malaysia have a lengthy history of diplomatic squabbles. A neutral forum was, therefore, a very useful development for all of those countries. ASEAN was established on the basis of non-intervention: that is, interaction within the group would focus entirely on economic matters, or else on matters of technical cooperation and integration, for example creating an open skies agreement, measures to tackle the spread of avian influenza (bird flu) or else transboundary environmental issues. By tradition and constitution, no member state would comment openly on political conditions within another member state and there would be no attempt at intervention or interference beyond borders. This was an essential condition since, otherwise, most states would have refused to join ASEAN. Of course, it is clear that a lot of discussion and

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politicking goes on behind the scenes but the main value of ASEAN is, in addition to the functional agreements and co-operation achieved, to provide the scenes behind which confidential discussions should take place. Given the enormous problems with mistrust and lack of capacity in Southeast Asia, it is not sensible to criticize ASEAN for not achieving more but to be grateful that it has been able to achieve what it has done. The limitations of the approach are evident in respect of the current political situation in Burma but the benefits of it are harder to discern, although they are certainly there. WHAT ARE THE OBJECTIVES AND FUNCTIONS OF THE ASEAN? The ASEAN way can be traced back to the signing of the Treaty of Amity and Cooperation in Southeast Asia. "Fundamental principles adopted from this included:

mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations; the right of every State to lead its national existence free from external interference, subversion or coercion; non-interference in the internal affairs of one another; settlement of differences or disputes by peaceful manner; renunciation of the threat or use of force; and effective cooperation among themselves".

The Association of Southeast Asian Nations has the following aims: To speed up growth in the economy of the member nations; to bring about cultural growth and progress in society of the member economies of ASEAN. To effect stability and and regional peace. This can be achieved by adhering to the norms of United Nations Charter and by having respect for justice. Principles of ASEAN or Association of Southeast Asian Nations : The different member nations of ASEAN abide by the following principles with respect to one another. These principles are recorded in the TAC or the Treaty Of Amity And Cooperation In Southeast Asia. The sovereignty, independence, equality, national identity, territorial integrity of all the member nations to be respected mutually. Cooperation among all members Should any conflicts arise, these conflicts or disputes are required to be settled in a peaceful way. Intervention in the internal matters of the other nation to be avoided. A member nation is entitled to the right of functioning in its own manner without intervention from any external source. Ignoring any forceful action

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National Economic Institutions (India)

Economic institutions in India are divided in two categories. The first type refers to the regulatory institutions and the second type refers to the intermediaries. The regulators are assigned with the job of governing all the divisions of the Indian financial system. These regulatory institutions are responsible for maintaining the transparency and the national interest in the operations of the institutions under their supervision. The banking institutions of India play a major role in the economy of the country. The banking institutions are the providers of depository and transaction services. These activities are the major sources of creating money. The banking institutions are the major sources of providing loans and other credit facilities to the clients. Apart from the banking financial institutions, there are a number of specialized financial institutions in India that have been incorporated for a definite purpose. These institutions include the insurance companies, the housing finance companies, mutual funds, merchant banks, credit reporting and debt collection companies and many more. Apart from these, there are several other financial institutions that are existing in the country. These are the stock brokers and sub-brokers, portfolio managers, investment advisors, underwriters, foreign institutional investors and many more. The various national economic institutions discussed herein are as follows: Reserve Bank of India Securities and Exchange Board of India Central Board of Direct Taxes Central Board of Excise and Customs National bank for Agricultural and Rural Development Export Import bank of India Small Industries Development bank of India Industrial development bank of India National Housing Bank

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Reserve Bank of India The reserve bank of India is the central banking system of India and controls the monetary policy as well as the US$300.21 billion of currency reserves. . The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934[2] and plays an important part in the development strategy of the government. It is a member bank of the Asian Clearing Union. The central bank was founded in 1935 to respond to economic troubles after the First World War. The Reserve Bank of India was set up on the recommendations of the Hilton Young Commission. The Central Office of the Reserve Bank was initially established in Kolkata but was permanently moved to Mumbai in 1937. Though originally set up as a shareholders bank, the RBI has been fully owned by the Govt.of India since its nationalization in 1949. The Reserve Bank of India is the main monetary authority of the country and beside that the central bank acts as the bank of the national and state governments. It formulates implements and monitors the monetary policy as well as it has to ensure an adequate flow of credit to productive sectors. The institution is also the regulator and supervisor of the financial system and prescribes broad parameters of banking operations within which the country's banking and financial system functions. Objectives are to maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public. The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India (RBI) for effective addressing of complaints by bank customers. The RBI controls the monetary supply, monitors economic indicators like the GDP and has to decide the design of the rupee banknotes as well as coins.

Functions of RBI Manager of exchange control One of the main functions of RBI is to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange markets in India. Issuer of currency - The bank issues and exchanges or destroys currency and coins not fit for circulation. The objectives are giving the public adequate supply of currency of good quality. RBI maintains the economic structure of the country so that it can achieve the objective of price stability as well as economic development, because both objectives are diverse in themselves. Developmental role - The central bank has to perform a wide range of promotional functions to support national objectives and industries.[6] The RBI faces a lot of intersectoral and local inflation-related problems. Some of these problems are results of the dominant part of the public sector. Banker to the government - The RBI is also a banker to the government and performs merchant banking function for the central and the state governments. It also acts as their banker.

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RBI has various tools to control the finances of the country. These are as follows: Bank rate - RBI (Reserve Bank of India) lends to the commercial banks through its discount window to help the banks meet depositors demands and reserve requirements. The interest rate the RBI charges the banks for this purpose is called bank rate. If the RBI wants to increase the liquidity and money supply in the market, it will decrease the bank rate and if it wants to reduce the liquidity and money supply in the system, it will increase the bank rate. The current rate is 6%. Cash Reserve Requirements (CRR): Every commercial bank has to keep certain minimum cash reserves with RBI. RBI can vary this rate between 3% and 15%. RBI uses this tool to increase or decrease the reserve requirement depending on whether it wants to affect a decrease or an increase in the money supply. An increase in CRR will make it mandatory on the part of the banks to hold a large proportion of their deposits in the form of deposits with the RBI. This will reduce the size of their deposits and they will lend less. This will in turn decrease the money supply. The current rate is 6%. Statutory Liquidity Requirements (SLR): Apart from the CRR, banks are required to maintain liquid assets in the form of gold, cash and approved securities. RBI has stepped up liquidity requirements for two reasons: - Higher liquidity ratio forces commercial banks to maintain a larger proportion of their resources in liquid form and thus reduces their capacity to grant loans and advances thus it is an anti-inflationary impact. A higher liquidity ratio diverts the bank funds from loans and advances to investment in government and approved securities. Securities and Exchange Board of India The Securities and Exchange Board of India (frequently abbreviated SEBI) was established on April 12, 1992. It is the regulator for the securities market in India. It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. Chaired by C B Bhave, SEBI is headquartered in the popular business district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasiexecutive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court. SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively. SEBI has been active in setting up the regulations as required under law. SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco. It had increased the extent and quantity of disclosures to be made by Indian corporate promoters. More recently, in light of the global meltdown, it liberalised the takeover code to facilitate investments by removing regulatory strictures. In one such move, SEBI has increased the application limit for retail investors to Rs 2 lakh, from Rs 1 lakh at present.

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Functions and Responsibilities: SEBI has to be responsive to the needs of three groups, which constitute the market: The issuers of securities The investors The market intermediaries The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as: To protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto. Central Board of Direct Taxes The CBDT is a part of Department of Revenue in the Ministry of Finance. On one hand, CBDT provides essential inputs for policy and planning of direct taxes in India,at the same time it is also responsible for administration of direct tax laws through the Income Tax Department. The Central Board of Direct Taxes is a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their exofficio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes. The Central Board of Revenue as the Department apex body charged with the administration of taxes came into existence as a result of the Central Board of Revenue Act, 1924. Initially the Board was in charge of both direct and indirect taxes. However, when the administration of taxes became too unwieldy for one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs with effect from 1.1.1964. This bifurcation was brought about by constitution of the two Boards u/s 3 of the Central Boards of Revenue Act, 1963. Composition of CBDT CBDT is composed of the following members: Chairman Member (Income Tax) Member (Investigation) Member Audit and Judicial) Member (Legislation) Member (Personnel) Member (Revenue and Audit) The Chairman and Members of Central Board of Direct Taxes are assisted by Joint Secretaries, Directors, Deputy Secretaries, Under Secretaries and ministerial staff to carry out their day-to-day functions. To monitor the day-today functioning of field formations, the CBDT is assisted by the following attached offices /Directorates:

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1. Directorate of Income-tax (IT) This Directorate has two wings Inspection- Board exercises efficient control and inspection of the work of the Incometax officers throughout the country. Examination - Centralised Conduct of departmental examinations for departmental promotions.

2. Directorate of Inspection (Audit) Ensures expeditious disposal and settlement of receipt audit objections and also review the work done in the different Commissioner Charges. 3. Directorate of Inspection (Research, Statistics and Public Relation) The main functions of this Directorate are research study on tax matters, printing of All India Revenue Statistics, preparation of taxpayers Information series, Departmental publications, publicity and public relations. 4. Directorate of Organisation & Management Services This Directorate has been assigned the job of Administrative Planning, Organisational Development, Management Information Systems and Work Measurement. 5. Directorate of Inspection (Vigilance) The main functions of this Directorate are conducting departmental enquiries, drafting of charge sheets, presenting the cases on behalf of the Department, preparing the enquiry reports against charged officials extra and passing of final orders. 6. Directorate of Income-tax (Systems) This Directorate performs the functions of Management Information System, Computerization in the Department and Designing of uniform system of computerization for Income Tax Department. 7. Directorate of Income-tax (Infrastructure) This Directorate will assist CBDT in attending to infrastructure matters. 8. Director General (Vigilance)/Director of Income Tax (Vigilance) The main function of this Directorate are conducting departmental enquiries, drafting of charge sheets, presenting the cases on behalf of the Department, preparing the enquiry reports against charges officials extra and passing of final orders. 9. Director General of Income-tax (Training) The National Academy of Direct Taxes, Nagpur is the premier training institution in the country for the officers and the staff of the Income-tax Department. Its primary task is to impart inductions training to the directly recruited Indian Revenue Service Officers The Academy imparts training to officers and staff of the Income-tax Department in coordination with its 5 Regional Training Institutes located at Bangalore, Kolkata, Hazaribagh, Lucknow and Mumbai. Central Board of Excise and Customs Central Board of Excise and Customs (CBEC) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs and Central Excise

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duties, prevention of smuggling and administration of matters relating to Customs, Central Excise and Narcotics to the extent under CBEC's purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise Commissionerates and the Central Revenues Control Laboratory. The Central Board of Excise and Customs, in the Ministry of Finance, is the apex body for administering the levy and collection of indirect taxes of the Union of India viz. Central Excise duty, Customs duty and Service Tax, and for facilitating cross border movement of goods & services. Mission CBECs mission is to achieve excellence in the formulation and implementation of Customs, Central Excise and Service Tax laws and procedures aimed at: Realizing the revenues in a fair, equitable, transparent and efficient manner. Administering the Governments economic, taxation and trade policies in a pragmatic manner Facilitating trade and industry by streamlining and simplifying Customs, Central Excise and Service Tax processes and helping Indian business to enhance its competitiveness Ensuring control on cross border movement of goods, services and intellectual property Creating a climate for voluntary compliance by providing information and guidance Combating revenue evasion, commercial frauds and social menace Supplementing the efforts to ensure national security. Service Functions Dissemination of information on law and procedures through electronic and print media Enabling filing of declarations, returns and claims through online services. Providing information on the status of processing of declarations, returns and claims Assisting the right holders in protecting their intellectual property rights Responding to public enquiries relating to Customs, Central Excise and Service Tax matters Providing Customs services such as examination of goods and factory stuffing of export goods at clients sites, as per policy. Regulatory Functions Levy and collection of Customs and Central Excise duties and Service Tax Registration and monitoring of units manufacturing excisable goods and service providers Receipt and scrutiny of declarations and returns filed with the department Prevention of smuggling and combating evasion of duties and service tax Enforcement of border control on goods and conveyances Assessment, examination and clearance of imported goods and export goods Implementation of export promotion measures Clearance of international passengers and their baggage Resolution of disputes through administrative and legal measures Sanction of refund, rebate and drawback Realization of arrears of revenue Audit of assessments for ensuring tax compliance.

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National Bank for Agricultural and Rural Development NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas. In discharging its role as a facilitator for rural prosperity NABARD is entrusted with 1. Providing refinance to lending institutions in rural areas 2. Bringing about or promoting institutional development and 3. Evaluating, monitoring and inspecting the client banks Besides this pivotal role, NABARD also: Acts as a coordinator in the operations of rural credit institutions Extends assistance to the government, the Reserve Bank of India and other organizations in matters relating to rural development Offers training and research facilities for banks, cooperatives and organizations working in the field of rural development Helps the state governments in reaching their targets of providing assistance to eligible institutions in agriculture and rural development

Some of the milestones in NABARD's activities are: Refinance disbursement under ST-Agri & Others and MT-Conversion/ Liquidity support aggregated Rs.16952.83 crore during 2007-08. Refinance disbursement under Investment Credit to commercial banks, state cooperative banks, state cooperative agriculture and rural development banks, RRBs and other eligible financial institutions during 2007-08 aggregated Rs.9046.27 crore. Through the Rural Infrastructure Development Fund (RIDF) Rs.8034.93 crores were disbursed during 2007-08. With this, a cumulative amount of Rs.74073.41 crore has been sanctioned for 280227 projects as on 31 March 2008 covering irrigation, rural

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roads and bridges, health and education, soil conservation, drinking water schemes, flood protection, forest management etc. Under Watershed Development Fund with a corpus of Rs.613.71 crore as on 31 March 2008, 416 projects in 94 districts of 14 states have benefited. Farmers now enjoy hassle free access to credit and security through 714.68 lakh Kisan Credit Cards that have been issued through a vast rural banking network. Under the Farmers' Club Programme, a total of 28226 clubs covering 61789 villages in 555 districts have been formed, helping farmers get access to credit, technology and extension services. Genesis and Historical Background The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) set up by the RBI under the Chairmanship of Shri B Sivaraman in its report submitted to Governor, Reserve Bank of India on November 28, 1979 recommended the establishment of NABARD. The Parliament through the Act 61 of 81, approved its setting up. The Committee after reviewing the arrangements came to the conclusion that a new arrangement would be necessary at the national level for achieving the desired focuses and thrust towards integration of credit activities in the context of the strategy for Integrated Rural Development. Against the backdrop of the massive credit needs of rural development and the need to uplift the weaker sections in the rural areas within a given time horizon the arrangement called for a separate institutional set-up. Similarly. The Reserve Bank had onerous responsibilities to discharge in respect of its many basic functions of central banking in monetary and credit regulations and was not therefore in a position to devote undivided attention to the operational details of the emerging complex credit problems. This paved the way for the establishment of NABARD. In pursuing this mission, NABARD focuses its activities on: Credit functions, involving preparation of potential-linked credit plans annually for all districts of the country for identification of credit potential, monitoring the flow of ground level rural credit, issuing policy and operational guidelines to rural financing institutions and providing credit facilities to eligible institutions under various programmes Development functions, concerning reinforcement of the credit functions and making credit more productive Supervisory functions, ensuring the proper functioning of cooperative banks and regional rural banks

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Main functions of NABARD Preparing of Potential Linked Credit Plans for identification of exploitable potentials under agriculture and other activities available for development through bank credit. Refinancing banks for extending loans for investment and production purpose in rural areas. Providing loans to State Government/Non Government Organizations (NGOs)/Panchayati Raj Institutions (PRIs) for developing rural infrastructure. Supporting credit I nnovations of Non Government Organizations (NGOs) and other nonformal agencies. Extending formal banking services to the unreached rural poor by evolving a supplementary credit delivery strategy in a cost effective manner by promoting Self Help Groups (SHGs). Promoting participatory watershed development for enhancing productivity and profitability of rainfed agriculture in a sustainable manner. On-site inspection of cooperative banks and Regional Rural Banks (RRBs) and off-site surveillance over health of cooperatives and RRBs. Role and Function NABARD is an apex institution accredited with all matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas. It is an apex refinancing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas. It takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc. It co-ordinates the rural financing activities of all the institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India and other national level institutions concerned with policy formulation. It undertakes monitoring and evaluation of projects refinanced by it. It prepares, on annual basis, rural credit plans for all districts in the country; these plans form the base for annual credit plans of all rural financial institutions. It promotes research in the fields of rural banking, agriculture and rural development.

Export Import Bank of India Export-Import Bank of India is the premier export finance institution of the country, set up in 1982 under the Export-Import Bank of India Act 1981. Government of India launched the institution with a mandate, not just to enhance exports from India, but to integrate the countrys foreign trade and investment with the overall economic growth. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor

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of export credit, like other Export Credit Agencies in the world, Exim Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment.

THE INITIATIVES Exim Bank of India has been the prime mover in encouraging project exports from India. The Bank provides Indian project exporters with a comprehensive range of services to enhance the prospect of their securing export contracts, particularly those funded by Multilateral Funding Agencies like the World Bank, Asian Development Bank, African Development Bank and European Bank for Reconstruction and Development. The Bank extends lines of credit to overseas financial institutions, foreign governments and their agencies, enabling them to finance imports of goods and services from India on deferred credit terms. Exim Banks lines of Credit obviate credit risks for Indian exporters and are of particular relevance to SME exporters. The Banks Overseas Investment Finance programme offers a variety of facilities for Indian investments and acquisitions overseas. The facilities include loan to Indian companies for equity participation in overseas ventures, direct equity participation by Exim Bank in the overseas venture and non-funded facilities such as letters of credit and guarantees to facilitate local borrowings by the overseas venture. The Bank provides financial assistance by way of term loans in Indian rupees/foreign currencies for setting up new production facility, expansion/modernization/upgradation of existing facilities and for acquisition of production equipment/technology. Such facilities particularly help export oriented Small and Medium Enterprises for creation of export capabilities and enhancement of international competitiveness. Under its Export Marketing Finance programme, Exim Bank supports Small and Medium Enterprises in their export marketing efforts including financing the soft expenditure relating to implementation of strategic and systematic export market development plans. The Bank has launched the Rural Initiatives Programme with the objective of linking Indian rural industry to the global market. The programme is intended to benefit rural poor through creation of export capability in rural enterprises. In order to assist the Small and Medium Enterprises, the Bank has put in place the Export Marketing Services (EMS) Programme. Through EMS, the Bank seeks to establish, on best efforts basis, SME sector products in overseas markets, starting from identification of prospective business partners to facilitating placement of final orders. The service is provided on success fee basis. Exim Bank supplements its financing programmes with a wide range of value-added information, advisory and support services, which enable exporters to evaluate international risks, exploit export opportunities and improve competitiveness, thereby helping them in their globalisation efforts.

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THE BOARD In its endeavours , Exim Bank of India has, all along, been guided, at the Board level, by senior policy makers, expert bankers, leading players in industry and international trade as well as professionals in exports or imports or financing thereof. The Board currently includes top level functionaries from the Ministries of Finance, Commerce, External Affairs and Industry, Government of India, a Deputy Governor from the Reserve Bank of India, Chairmen of Industrial Development Bank of India, Export Credit Guarantee Corporation of India, State Bank of India, Punjab National Bank and Bank of Baroda and the Director General of Research and Information System for Developing Countries. Some of the illustrious Board Members in the past, include Dr. Montek Singh Ahluwalia (former Secretary, Ministry of Finance, Government of India and currently Deputy Chairman, Planning Commission of India), Shri Kamlesh Sharma (former Indian High Commissioner in the UK and currently the Commonwealth Secretary General), Dr. Abid Hussain (former Commerce Secretary, Government of India and Indian Ambassador to USA), Dr. Bimal Jalan (former Secretary, Ministry of Finance, Government of India and Governor, RBI and currently a Member of Parliament in the Rajya Sabha), Shri S. Venkitaramanan (former Secretary, Ministry of Finance, Government of India and Governor, RBI), Dr. Deepak Nayyar (former Chief Economic Advisor, Ministry of Finance, Government of India and currently Professor of Economics, Jawaharlal Nehru University, New Delhi), Shri Tejendra Khanna (former Commerce Secretary, Government of India and currently Lt. Governor of Delhi), Dr. S.S.Sidhu (former Industry Secretary, Government of India and currently Governor of Goa ), Shri. T.R. Prasad (former Industry Secretary and Cabinet Secretary, Government of India ) and Shri S.S. Tarapore (former Deputy Governor, RBI, who led the Tarapore Committee on Capital Account Convertibility). Exim Bank plays four-pronged role with regard to India's foreign trade: those of a coordinator, a source of finance, consultant and promoter. Exim Bank is the Coordinator of the Working Group Mechanism for clearance of Project and Services Exports and Deferred Payment Exports (for amounts above a certain value currently US$ 100 million). The Working Group comprises Exim Bank, Government of India representatives (Ministries of Finance, Commerce, External Affairs), Reserve Bank of India, Export Credit Guarantee Corporation of India Ltd. and commercial banks who are authorized foreign exchange dealers. This inter-institutional Working Group accords clearance to contracts (at the post-award stage) sponsored by commercial bank or Exim Bank, and operates as a one-window mechanism for clearance of term export proposals. On its own, Exim Bank can now accord clearance to project export proposals up to US$ 100 million in value. Forms of Financial Assistance Provided by EXIM Bank to Indian CompaniesDelayed Payment Exports- Term loans are provided to those exporters who deal with exporting of goods and services and this enables them to offer delayed credit to the foreign buyers. This system of deferred credit covers Indian consultancies, technology,

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and other services. Commercial banks take part in this program either directly or under risk syndication arrangements. Pre-shipment credit- Indian companies which are highly involved in the execution of export activities beyond the cycle time of six months are funded by EXIM Bank. The construction or turnkey project exporters enjoy the provision of rupee mobilization. Term loans for export production- EXIM Bank offers term loans to the 100 percent export oriented units, units involved in free trade zones, and exporters of various softwares in India. EXIM bank also works in association with International Finance Corporation, Washington, to provide financial assistance to the small scale and medium industrial units in terms of ameliorating the export production capacity of these units in India. EXIM Bank also provides funded and non- funded facilities to deemed exports from India. Foreign Investment Finance- EXIM bank provides financial assistance for equity contribution to the Indian companies who form Joint Venture with the foreign companies. Financing export marketing- It helps the exporters carry out their export market development plan in Indian market. Financial Assistance Provided by EXIM Bank to Overseas CompaniesForeign Buyer's Credit- the foreign players are entitled to a sum of financial assistance in order to import goods and services on deferred payments Lines of Credit- EXIM bank also offers financial assistance to the overseas financial institutions and various government agencies for import of goods and services from India. Reloaning Options to Foreign Banks- The foreign banks are entrusted with funding from EXIM bank in order to provide the same to the their clients across the globe for importing of goods from India.

Small Industries Development bank of India Small Industries Development Bank of India is an independent financial institution aimed to aid the growth and development of micro, small and medium scale enterprises in India. Set up in April 2nd 1990 through an act of parliament, it was incorporated initially as a wholly owned subsidiary of Industrial Development Bank of India. Current shareholding is widely spread among various state owned banks, insurance companies and financial institutions. Beginning as a refinancing agency to banks and state level financial institutions for their credit to small industries, it has expanded it's activities, including direct credit to the SME through 100 branches in all major industrial

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clusters in India. Besides, it has been playing the development role in several ways such as support to micro-finance institutions for capacity building and on lending. Recently it has opened 7 branches christened as Micro Finance branches, aimed especially at dispensing loans up to Rs. 5.00 lakh. It is an apex body and nodal agency for formulating, coordination and monitoring the policies and programme for promotion and development of small scale industries. SIDBI has also floated several other entities for related activities. Credit Guarantee Fund Trust for Micro and Small Enterprises. provides guarantees to banks for collateral free loans extended to SME. SIDBI Venture Capital Ltd. is Venture Capital Company focussed at SME. SME Rating Agency of India Ltd. (SMERA) provides composite ratings to SME. The business domain of SIDBI consists of small scale industrial units, that contribute significantly to the national economy in terms of production, employment and exports. Small scale industries are the industrial units in which the investment in plant and machinery does not exceed Rs.10 million . About 3.1 million such units, employing 17.2 million persons account for a share of 36 per cent of India's exports and 40 per cent of industrial manufacture. In addition, SIDBI's assistance flows to the transport, health care and tourism sectors and also to the professional and self-employed persons setting up small-sized professional ventures SIDBI retained its position in the top 30 Development Banks of the World in the latest ranking of The Banker, London. As per the May 2001 issue of The Banker, London, SIDBI ranked 25th both in terms of Capital and Assets. Mission To empower the Micro, Small and Medium Enterprises (MSME) sector with a view to contributing to the process of economic growth, employment generation and balanced regional development Industrial Development Bank of India The Industrial Development Bank of India (IDBI) was established on 1 July 1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. In 16 February 1976, the ownership of IDBI was transferred to the Government of India and it was made the principal financial institution for coordinating the activities of institutions engaged in financing, promoting and developing industry in the country. Although Government shareholding in the Bank came down below 100% following IDBIs public issue in July 1995, the former continues to be the major shareholder (current shareholding: 52.3%). During the four decades of its existence, IDBI has been instrumental not only in establishing a well-developed, diversified and efficient industrial and institutional structure but also adding a qualitative dimension to the process of industrial development in the country. IDBI has played a pioneering role in fulfilling its mission of promoting industrial growth through financing of medium and long-term projects, in consonance with national plans and priorities. Over the years, IDBI has enlarged its basket of products and services, covering almost the entire spectrum of industrial activities, including manufacturing and services. IDBI provides financial assistance, both in rupee and foreign currencies, for green-field projects as also for expansion, modernisation and diversification purposes. In the wake of financial sector

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reforms unveiled by the government since 1992, IDBI evolved an array of fund and feebased services with a view to providing an integrated solution to meet the entire demand of financial and corporate advisory requirements of its clients. IDBI also provides indirect financial assistance by way of refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment terms. IDBI has played a pioneering role, particularly in the pre-reform era (196491),in catalyzing broad based industrial development in the country in keeping with its Government-ordained development banking charter. In pursuance of this mandate, IDBIs activities transcended the confines of pure long-term lending to industry and encompassed, among others, balanced industrial growth through development of backward areas, modernisation of specific industries, employment generation, entrepreneurship development along with support services for creating a deep and vibrant domestic capital market, including development of apposite institutional framework. Narasimam committee recommends that IDBI should give up its direct financing functions and concentrate only in promotional and refinancing role. But this recommendation was rejected by the government. Later RBI constituted a committee under the chairmanship of S.H.Khan to examine the concept of development financing in the changed global challenges. This committee is the first to recommend the concept of universal banking. The committee wanted the development financial institution to diversify its activity. It recommended to harmonise the role of development financing and banking activities by getting away from the conventional distinction between commercial banking and developmental banking. In September 2003, IDBI diversified its business domain further by acquiring the entire shareholding of Tata Finance Limited in Tata Home finance Ltd., signaling IDBIs foray into the retail finance sector. The fully-owned housing finance subsidiary has since been renamed IDBI Home finance Limited. In view of the signal changes in the operating environment, following initiation of reforms since the early nineties, Government of India has decided to transform IDBI into a commercial bank without eschewing its secular development finance obligations. The migration to the new business model of commercial banking, with its gateway to low-cost current, savings bank deposits, would help overcome most of the limitations of the current business model of development finance while simultaneously enabling it to diversify its client/ asset base. Towards this end, the IDB (Transfer of Undertaking and Repeal) Act 2003 was passed by Parliament in December 2003. The Act provides for repeal of IDBI Act, corporatisation of IDBI (with majority Government holding; current share: 58.47%) and transformation into a commercial bank. The provisions of the Act have come into force from 2 July 2004 in terms of a Government Notification to this effect. The Notification facilitated formation, incorporation and registration of Industrial Development Bank of India Ltd. as a company under the Companies Act, 1956 and a deemed Banking Company under the Banking Regulation Act 1949 and helped in obtaining requisite regulatory and statutory clearances, including those from RBI. IDBI would commence banking business in accordance with the provisions of the new Act in addition to the business being transacted under IDBI Act, 1964 from 1 October 2004, the Appointed Date notified by the Central Government. IDBI has firmed up the infrastructure, technology platform and reorientation of its human capital to achieve a smooth transition.

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IDBI Bank, with which the parent IDBI was merged, was a vibrant new generation Bank. The Pvt Bank was the fastest growing banking company in India. The bank was pioneer in adapting to policy of first mover in tier 2 cities. The Bank also had the least NPA and the highest productivity per employee in the banking industry. On 29 July 2004, the Board of Directors of IDBI and IDBI Bank accorded in principle approval to the merger of IDBI Bank with the Industrial Development Bank of India Ltd. to be formed incorporated under the Companies Act, 1956 pursuant to the IDB (Transfer of Undertaking and Repeal) Act, 2003 (53 of 2003), subject to the approval of shareholders and other regulatory and statutory approvals. A mutually gainful proposition with positive implications for all stakeholders and clients, the merger process is expected to be completed during the current financial year ending 31 March 2005. The immediate fall out of the merger of IDBI and idbi bank was the exit of employees of idbi bank. The cultures in the two organizations have taken its toll. The IDBI BANK now is in a growing fold. With its retail banking arm expanding further after the merger of United western Bank. IDBI would continue to provide the extant products and services as part of its development finance role even after its conversion into a banking company. In addition, the new entity would also provide an array of wholesale and retail banking products, designed to suit the specific needs cash flow requirements of corporates and individuals. In particular, IDBI would leverage the strong corporate relationships built up over the years to offer customised and total financial solutions for all corporate business needs, single-window appraisal for term loans and working capital finance, strategic advisory and hand-holding support at the implementation phase of projects, among others. IDBIs transformation into a commercial bank would provide a gateway to low-cost deposits like Current and Savings Bank Deposits. This would have a positive impact on the Banks overall cost of funds and facilitate lending at more competitive rates to its clients. The new entity would offer various retail products, leveraging upon its existing relationship with retail investors under its existing Suvidha Flexi-bond schemes. In the emerging scenario, the new IDBI hopes to realize its mission of positioning itself as a one stop super-shop and most preferred brand for providing total financial and banking solutions to corporates and individuals, capitalising on its intimate knowledge of the Indian industry and client requirements and large retail base on the liability side. IDBI upholds the highest standards of corporate governance in its operations. The responsibility for maintaining these high standards of governance lies with its Board of Directors. Two Committees of the Board viz. the Executive Committee and the Audit Committee are adequately empowered to monitor implementation of good corporate governance practices and making necessary disclosures within the framework of legal provisions and banking conventions.

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National Housing Bank The National Housing Bank (NHB) is a state owned bank and regulation authority in India, created on July 8, 1988 under section 6 of the National Housing Bank Act (1987). The headquarters is in New Delhi. The institution, owned by the Reserve bank of India, was established to promote private real estate acquisition. The NHB is regulating and re-financing social housing programs and other activities like research and IT-initiatives, too. In terms of the National Housing Bank Act, 1987, National Housing Bank is expected, in the public interest, to regulate the housing finance system of the country to its advantage or to prevent the affairs of any housing finance institution being conducted in a manner detrimental to the interest of the depositors or in a manner prejudicial to the interest of the housing finance institutions. For this, National Housing Bank has been empowered to determine the policy and give directions to the housing finance institutions and their auditors. Besides the regulatory provisions of the National Housing Bank Act, 1987, National Housing Bank has issued the Housing Finance Companies (NHB) Directions, 2001 as also Guidelines for Asset Liability Management System in Housing Finance Companies. These are periodically updated through issue of circulars and notifications. As part of the supervisory process, an entry level regulation is sought to be achieved through a system of registration of housing finance companies. National Housing Bank supervises the sector through a system of on-site and off-site surveillance.

Objectives NHB has been established to achieve, inter alia, the following objectives To promote a sound, healthy, viable and cost effective housing finance system to cater to all segments of the population and to integrate the housing finance system with the overall financial system. To promote a network of dedicated housing finance institutions to adequately serve various regions and different income groups. To augment resources for the sector and channelise them for housing. To make housing credit more affordable. To regulate the activities of housing finance companies based on regulatory and supervisory authority derived under the Act. To encourage augmentation of supply of buildable land and also building materials for housing and to upgrade the housing stock in the country. To encourage public agencies to emerge as facilitators and suppliers of serviced land, for housing.

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Organization NHB is a lean, officer oriented, professionally managed institution with its headquarters in Delhi and offices in Mumbai, Hyderabad, Bangalore, Chennai, Kolkata, Lucknow and Ahmedabad. It has 84 professionals at different levels. NHB is committed to pursuit of excellence through innovation, doer work culture and contemporary work practices with technology intervention. It has the following Departments, apart from NHB RESIDEX Cell for handling residential index activities Regulation & Supervision Refinancing Operations Direct Finance Operations Enabling Processes Information Technology Resource Mobilization and Management Development and Risk Management Board and CMD Secretariat Legal Department

NHB supports housing finance sector by: Extending refinance to different primary lenders in respect of -

* Eligible housing loans extended by them to individual beneficiaries, for project loans extended by them to various implementing agencies.
Lending directly in respect of projects undertaken by public housing agencies for housing construction and development of housing related infrastructure. Guaranteeing the repayment of principal and payment of interest on bonds issued by Housing Finance Companies. Acting as Special Purpose Vehicle for securitising the housing loan receivables. The principal mandate of the Bank is to promote housing finance institutions to improve/strengthen the credit delivery network for housing finance in the country. The Bank has played a facilitator role in this regard instead of itself opening such dedicated housing finance institutions. For this purpose, NHB has issued the Model Memorandum and Articles of Association. NHB has also issued guidelines for participating in the equity of housing finance companies. All housing finance companies registered with NHB u/s 29A of the National Housing Bank Act, 1987 and scheduled commercial/cooperative banks are eligible for refinance support subject to terms and conditions as laid down under the respective refinance schemes. As a part of its promotional role NHB has also formulated a scheme for guaranteeing the bonds to be issued by the housing finance companies. Considering the need for trained personnel for the sector NHB has designed and conducted various training programmes. __________________________________________________________________

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REFERENCES:

Thanat Khoman, "ASEAN Conception and Evolution", in the ASEAN Reader, Institute of Southeast Asian Studies, Singapore, 1992. S. Rajaratnam, "ASEAN: The Way Ahead", in The ASEAN Reader, Institute of Southeast Asian Studies, Singapore, 1992 Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 488 Overview: a Navigational Guide, World Trade Organization. For the complete list of "The Uruguay Round Agreements", see WTO legal texts, World Trade Organization, and Uruguay Round Agreements, Understandings, Decisions and Declarations, WorldTradeLaw.net United Nations Development Business' website Goldman, Michael. Imperial Nature: The World Bank and Struggles for Social Justice in the Age of Globalization. New York: University of South Asia Press, 2005 pp.60 63 Brakman-Garretsen-Marrewijk-Witteloostuijn, Nations and Firms in the Global Economy, Chapter 10: Trade and Capital Restriction Economic Institutions in India Parthasasathi Banerjee (Author), Frank-Jurgen Richter (Author)

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