"The IMF cannot be effective or credible without a shift in governance structure and voting power in line with the changing importance of countries in the global economy, Mukherjee said during his intervention on 'Global Economy and IMF Reforms,' being held here.
Unless relative power in the board of directors and the board of governors reflects the changing global economic reality, the legitimacy of the IMF will again be questioned, the Finance Minister added.
"We are all agreed that there has to be a shift in quotas of at least 5 per cent to dynamic emerging markets and developing countries. The ad hoc increase should be used in a manner to focus the quota increases to dynamic emerging markets and developing countries.
This is best done through a PPP-GDP based mechanism. In all simulations produced so far the shift to such economies is still well below their real shares in the global economy," he said.
Mukherjee had last week called for shifting more voting power in favour of emerging market economies in IMF as they represented around 47.5 per cent of global economy, but had only 39.5 per cent share in the multilateral lending body.
"Over and under-representation defined narrowly in terms of the flawed formula is difficult to accept. This is not a forward looking approach and will not aid the legitimacy of the Fund," he said.
Calling on the advanced countries to be more pragmatic and share a greater part of the burden of the shift, Mukherjee said the call for a five to six per cent shift from advanced economies should be understood in this context.
"For us to support a substantial quota increase, the shift has to be large. If the shift is going to be modest, it would be very difficult to support a large quota increase which would lock in the realignment for many years to come. Any increase in quotas should see a corresponding roll back in the NAB," he said.