RBI chief meets IMF MD to discuss war impact

Monday, 14 April 2003, 19:30 IST
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Reserve Bank of India (RBI) governor Bimal Jalan met International Monetary Fund (IMF) managing director Horst Kohler here and discussed the impact of a possible increase in oil prices.

WASHINGTON: Jalan is heading the Indian delegation to the World Bank-IMF annual spring meetings here in the absence of Finance Minister Jaswant Singh who couldn't come because of preoccupations back home. Speaking at the IMF's International Monetary and Financial Committee, Jalan said if oil prices were to turn adverse, the ongoing economic crisis could become highly detrimental to global growth and welfare, apart from seriously affecting the current growth prospects in emerging Asia. "Besides fuelling inflation and production costs, impeding growth momentum, it would impose a serious burden on the balance of payments situation," he added. He appreciated Kohler's statements assuaging markets and indicating the contingency plan of the Fund to deal with the problems of shock-affected economies. Jalan wanted the IMF to expand the scope of its Compensatory Financing Facility to oil-importing countries, allowing them to draw finance almost on an automatic basis, linked to oil price movements. He visualised a growth rate of over six percent in India following supportive policy measures in the country's budget and an industrial revival. "Despite adverse developments in the global economy and a severe drought, India achieved a reasonable growth of 4.4 percent during 2002-03 and is likely to grow by over 6.0 percent in 2003-04," Jalan said. He said the relatively satisfactory performance of the Indian economy coincided with low inflation, strong external sector performance, record level of foreign exchange reserves and a vastly improved macroeconomic environment. Jalan said, "Industrial output is showing signs of recovery and export performance is robust. India is confident that its economic slowdown is bottoming out and a revival is under way. The current policy framework was supportive of the revival process."
Source: IANS