Aspirant Academy

Economy

Key Points at a Glance

Global Economic Issues: WTO, World Bank, IMF Roles

Paper I · Unit 2 Section 1 of 11 0 PYQs 36 min
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Key Points at a Glance

  1. WTO (World Trade Organization): Established 1 January 1995 (succeeding GATT 1947), headquartered in Geneva, Switzerland. Has 166 member countries (as of 2024; latest: Comoros and Timor-Leste, 2024). India is a founding member. The WTO administers 16 multilateral trade agreements and 2 plurilateral agreements.

  2. WTO's Trade Volumes: WTO-governed trade covers approximately $33 trillion in global merchandise and commercial services trade (2023). Global merchandise exports: $23.8 trillion (2023). India's merchandise exports: $778 billion (FY2023-24).

  3. World Bank Group Structure: The World Bank is not a single institution — it is a Group of 5 institutions: IBRD (International Bank for Reconstruction and Development), IDA (International Development Association), IFC (International Finance Corporation), MIGA (Multilateral Investment Guarantee Agency), ICSID (International Centre for Settlement of Investment Disputes). Headquartered in Washington D.C.

  4. IMF — Special Drawing Rights (SDR): The IMF's reserve asset — SDR is not a currency but a potential claim on freely usable currencies of IMF members. SDR basket: US Dollar (43.38%), Euro (29.31%), Chinese Yuan/Renminbi (12.28%), Japanese Yen (7.59%), British Pound Sterling (7.44%). India's IMF quota: SDR 13,114.4 million (2.75% of total quotas, 13th largest).

  5. IMF's COVID-19 Response: IMF provided $290 billion in emergency financing to 94 countries during 2020-21. In August 2021, IMF allocated SDR 456.5 billion ($650 billion) — the largest SDR allocation ever — to all members in proportion to their IMF quota, to boost global liquidity. India received SDR 12.57 billion ($17.86 billion).

  6. IBRD vs. IDA: IBRD lends to middle-income and creditworthy low-income countries at near-market rates (currently lending rates ~4-5%). IDA (International Development Association) lends to the world's 74 poorest countries — concessional terms (near zero interest, 5-10 year grace, 25-40 year maturity). India graduated from IDA in 2014 (now borrows from IBRD). India's IBRD loan portfolio: approximately $25 billion (active, 2024).

  7. WTO Dispute Settlement: The WTO's Dispute Settlement Body (DSB) adjudicates trade disputes. A Panel issues findings; the Appellate Body (AB) hears appeals. As of 2023, all 7 AB members' seats are vacant — US has blocked new appointments since 2019 (alleging AB judicial overreach), creating an "Appellate Body crisis." India has been party to 40+ WTO disputes (as complainant and respondent).

  8. World Bank's Current Priorities: The World Bank's Evolution Roadmap (2023) redefines its mission to tackle "global challenges that transcend national borders" — climate change, pandemics, fragility and conflict. It aims to double private capital mobilisation. IDA 20 replenishment (2022): $93 billion (largest ever) for climate, human capital, and fragile states.

  9. IMF Article IV Consultations: IMF conducts annual "Article IV Consultations" with each member country — an economic health check. IMF publishes the World Economic Outlook (WEO) semi-annually. IMF's April 2025 WEO projects global growth at 2.8% for 2025 (down from 3.3% in 2024 due to US tariff uncertainty). India projected at 6.2% GDP growth in 2025-26.

  10. Doha Development Agenda (DDA): WTO's multilateral trade negotiation round launched in Doha, Qatar (November 2001). Aimed to lower trade barriers and revise trade rules — but stalled since 2008. Key India-WTO confrontation: India blocked the Bali Trade Facilitation Agreement (TFA) in 2014 seeking permanent solution to public stockholding for food security. The TFA was eventually ratified in 2017 (India got "Peace Clause" protection for food subsidies).

  11. New Development Bank (NDB) — BRICS Bank: Established by BRICS (Brazil, Russia, India, China, South Africa) in 2014, operational 2016; HQ Shanghai. Provides infrastructure finance for BRICS and other emerging economies. India's NDB loan portfolio: $13+ billion (2024). NDB expanded to include Egypt, UAE, Bangladesh, Uruguay — now has 9 members.

  12. India and Bretton Woods Institutions: India is a founder member of IMF and World Bank (1945). India's IMF quota: 2.75% (SDR 13,114 million) — 13th largest shareholder. India's World Bank (IBRD) shareholding: ~4.4% votes — 7th largest. India is also a founding member of AIIB (Asian Infrastructure Investment Bank, 2016) with 8.52% shareholding — 3rd largest after China (26.6%) and India.