India's representatives at multilateral institutions called to meet FM

When he meets the representatives on August 20, the FM is likely to take their feedback on various macroeconomic issues

Against the backdrop of a difficult economic situation, Finance Minister P Chidambaram is going to meet India’s representatives at multilateral institutions on August 20.

Mukesh Prasad, Rakesh Mohan and Umesh Kumar — executive directors at the World Bank, International Monetary Fund (IMF) and Asian Development Board, respectively — are likely to brainstorm with the finance minister over macroeconomic issues.

A finance ministry official said the meeting was part of the finance ministry’s annual interaction with India’s representatives at global institutions but the difference this time was that it was being held in New Delhi — with all three of them together.

“The finance minister may take their feedback on various issues, including outside perspective on India’s economy, policies adopted by other countries, what could be India’s stand on various issues, etc,” another official, who did not wish to be named, told Business Standard.

He added such interactions usually took place when the executive directors visited India or when the finance minister was in Washington or Manila to attend annual meetings. This was for the first time that all the three were meeting the finance minister together.

Executive directors have a dual responsibility — as representatives of the multilateral institution’s member country/countries that appointed or elected them and as officials at the institution, representing interests and concerns of their respective countries.

Separately, finance ministry officials are also in constant touch with other officials of these institutions. There were murmurs that India might seek assistance from these institutions, but finance ministry officials denied that. Such talks are usually kept secret till the last moment.

The meeting comes even as India is considering measures like curbing imports to rein in a wide current account deficit, besides various options like a sovereign bond issue. These moves are aimed at stablising the rupee. International perspective on the measures would be significant.

The finance ministry is considering issuing sovereign bonds to raise dollars from global investors rather than restricting it to Non-Resident Indians and may look at issuing such bonds at regular intervals. It is likely to wait for the impact of measures taken by RBI as well as the developments in the US before taking a final call on the matter.

CAD touched an all-time high of 4.8% of GDP in 2012-13, against 4.2% in 2011-12. Rupee once again breached the mark of Rs 60 against a dollar today after RBI maintained a status quo on policy rates. Rupee had touched a lifetime low of 61.21 on July 8, forcing RBI to take some measures and made the Indian currency scarce in the market.