Washington, Sept. 28 (PTI): Dismissing IMF’s warning signals about mounting fiscal deficit and debt, India today said its economic fundamentals were “quite strong” and there was no need to press the panic button.
India’s GDP growth is impressive and remains one of the strongest in the world despite drought this year, finance minister Jaswant Singh said countering IMF’s claim that the country’s combined deficit was high at 10 per cent of GDP and debt had reached 70 per cent of GDP.
“It is satisfying that despite the prevailing drought conditions in some parts of the country, the economic environment remains congenial for growth with modest inflation, ample liquidity and soft interest rates, sound financial system, strong external sector and record level of foreign exchange,” he told the annual Fund-Bank meeting.
Agreeing that the developing countries should keep external debt within manageable limits, Singh said “I am glad that India has been following a highly prudent external debt management policy despite substantial capital account liberalisation.
“Our external debt is lower than two years ago, and short-term debt is very small and does not pose any potential problems even in the event of unanticipated external shocks,” Singh said. India’s forward foreign exchange liabilities were less than its forward assets. In managing its foreign exchange at record $ 62 billion, we have provided for liquidity at risk also, he said.