- India has been participating in the Financial Transaction Plan (FTP) of the IMF since 2002.
- FTP involves allowing the IMF to convert India’s rupee holdings, part of its quota contribution, into hard currency. This hard currency is then lent to other member countries that are debtors to the IMF.
Quota/Voice Reforms:
- As part of the Fourteenth General Review of Quotas (2010), India’s total quota in the IMF increased to SDR 13,114.4 million from SDR 5821.5 million.
- India’s share in the IMF rose to 2.75% from 2.44%, making it the eighth-largest quota-holding country.
- These reforms realigned quota shares, giving more influence to dynamic Emerging Market and Developing Countries (EMDCs).
- India’s increased quota reflects its economic growth and the growing size of its economy, enhancing its voice in the IMF’s decision-making process.
FAQs
Q: What is a Financial Transaction Plan (FTP)?
A Financial Transaction Plan (FTP) is a strategic blueprint outlining an individual’s or organization’s financial activities. It encompasses budgeting, investment strategies, debt management, and savings goals. It serves as a roadmap to achieve financial objectives efficiently.
Q: How does an FTP differ from a traditional budget?
While a budget primarily focuses on managing expenses and income on a short-term basis, an FTP takes a more holistic approach. It not only encompasses budgeting but also includes long-term financial goals, investment strategies, retirement planning, and risk management.
Q: What are the key components of an effective FTP?
An effective FTP comprises several key components, including:
- Financial goals: Clear objectives such as saving for retirement, buying a house, or paying off debt.
- Budgeting: Allocating income towards expenses, savings, investments, and debt repayment.
- Investment strategy: Determining asset allocation, risk tolerance, and investment vehicles.
- Risk management: Assessing and mitigating financial risks through insurance and contingency plans.
- Monitoring and adjustments: Regularly reviewing the plan and making necessary adjustments based on changes in circumstances or financial goals.
Q: Who can benefit from creating an FTP?
Anyone can benefit from creating an FTP, regardless of their financial situation. Whether you’re just starting your career, planning for retirement, or managing a business, having a structured financial plan can help you make informed decisions, achieve your goals, and navigate financial challenges effectively.
Q: How often should an FTP be reviewed and updated?
It’s recommended to review and update your FTP regularly, typically at least once a year or whenever there are significant life changes or financial milestones. This ensures that your plan remains relevant and aligned with your current financial situation, goals, and market conditions. Regular reviews also allow for adjustments to be made to accommodate any shifts in priorities or strategies.
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