Finance minister P. Chidambaram in Xianghe, China, on Saturday. (AFP)

Xianghe, China, Oct. 15 (PTI): India?s economic prospects look ?very good? with the central government giving a big push to the reforms process,? managing director of the International Monetary Fund (IMF) Rodrigo Rato said here today.

?The Indian economy is on a very strong footing with a very strong growth. We certainly share with the Indian government and finance minister there needs to be special vigilance against inflationary pressures,? he said.

?I had a chance to meet the Indian finance minister once again after my visit to India last spring and we had a very constructive meeting,? Rato said at a press conference soon after his bilateral meeting with finance minister P. Chidambaram on the sidelines of the seventh G-20 meeting of finance ministers and central bankers here.

The IMF managing director said, ?India is one of the countries dealing with the pressures of translating to the consumer the reality of oil prices.?

He also congratulated Indian authorities for the implementation of the reform in the value-added tax structure.

?The finance minister has informed us about an important legislation regarding the banking sector and the pension reform which will be tabled in Parliament,? he said.

?So we see clearly that the Indian government is moving in a path of reform that will allow the Indian economy to perform on a strong footing in future. We think that the prospects for the Indian economy are very good,? Rato said.        

Turning to the global economic outlook, he said IMF projects world economic growth of 4.3 per cent in both 2005 and 2006.

?However, we do see some significant risks that under certain circumstances could increase the vulnerability of the global economy,? Rato said.

Despite the broadly satisfactory prospects for the global economy, there are risks to growth stemming from higher oil prices, he said.        

A second major risk comes from global imbalances, the IMF boss said.

?The symptoms of these are high current account deficits and rapidly increasing debt in the United States, and corresponding surpluses in Japan, China and many other Asian emerging market economies, and increasingly oil-producing countries, including Russia as well as countries of West Asia.

Rato said he actively participated at today's session at the G-20 on the reform of the Bretton Wood institutions, including the IMF.

?Today I discussed steps we have taken in the past few weeks to take the strategy to the next stage. The organising principle of the strategy is to help member countries to meet the challenge of globalisation,? he said.

?Our intent is to make the fund more focused on the key priorities of this effort by making our advice to individual members and the whole international community more effective,? Rato added.