International Monetary Fund hikes SDR allocation to India

The International Monetary Fund (IMF) has sharply increased its allocation of Special Drawing Rights (SDR) to India, in line with the country's existing quota in the fund. 

SDR is an alternate reserve currency floated by the IMF, which the member countries can freely exchange between themselves instead of relying on currency of any one particular country. SDR is a basket of U.S. dollar, Japanese yen, euro, pound sterling and Chinese Renminbi.

A statement by the Reserve Bank of India said on Wednesday that the IMF has increased India's SDR quota to 12.57 billion, which is equivalent to $17.86 billion at the latest exchange rate, on August 23. 

"The total SDR holdings of India now stands at SDR 13.66 billion (equivalent to around USD 19.41 billion at the latest exchange rate) as on August 23, 2021," the RBI said, adding the increased SDR will reflect in the foreign exchange reserves data for the week ended August 27.

IMF makes the general SDR allocation to its members in proportion to their existing quotas in the Fund. On August 2, the board of IMF had approved a general allocation of about SDR 456 billion, of which India's share came at SDR 12.57 billion. 

India holds 2.75 per cent of SDR quota, and 2.63 per cent of votes in the IMF. The country has been lobbying to increase the voting share in the IMF for quite some time. The decision on this is due in 2023.