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Fundamentals of Indian economy sound: Jaswant Singh

T V Parasuram in Washington

India will be able to withstand the costs of the border stand off with Pakistan, Finance Minister Jaswant Singh has said.

"The fundamentals of the Indian economy are sound. For instance, India's current account deficit is less than one per cent. Even the impact of the drought would be marginal," he said in Washington.

Addressing reporters on Sunday after attending the annual meetings of the World Bank and International Monetary Fund, he said the first requirement of security was economic security. He emphasised that India and China were the fastest growing economies in the world. "In a global climate of uncertainty, India and China stand out as islands of stability and islands of growth," Singh said.

Singh denied that the divestment programme in India had slowed down. "A ninety-day period to review issues does not constitute a slowdown," he said.

He agreed with critics that the fiscal deficit had to be reduced and the debt burden lessened but said it was premature to draw the conclusion that the growth of the economy had slowed.

The minister pointed out that the India's decision on the issue of capital account convertibility had been widely criticised earlier, but was proved right and today many countries were going to Reserve Bank Governor Bimal Jalan for advice.

The minister met World Bank President James Wolfensohn, IMF Managing Director Horst Kohler, US Treasury Secretary Paul O'Neill and finance ministers of Canada, Bhutan, Mauritius, Nepal, Bangladesh and Sri Lanka during his US visit.

He said deprivation and poverty are today's principal challenges.

"We have to recognise that 85 per cent of humanity has access to only 15 per cent of the world's resources. It will be difficult, as Bank President Wolfensohn pointed out, to have lasting peace in the face of this inequality," he said.

Singh said the current series of meetings have once again shown that there remained a significant gap between what needed to be done and what would actually get done on the ground, and that gap had to be narrowed.

He said the Centre had recently held three meetings with state finance ministers and agreed upon a five or six point programme on the economic situation in the states. This has been done for the first time, he said.

Answering a question about the difficulties the World Bank had mentioned about carrying out its education programme in India, Singh said such problems reflected the fact that India had a federal system of government and the states were zealous about their prerogatives.

But these problems are being sorted out, he said. Singh said.

India would host a meeting of Finance Ministers from G-20 countries in November.

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