India tries to put a brave face in front of global financial bodies as rupee tanks

This is the first time executive directors representing India at World Bank, IMF, ADB are meeting the FM together

As global factors take a toll on the Indian economy, the government on Wednesday worked out a strategy for increasing its engagement with multilateral institutions and assured that measures taken to contain the current account deficit (CAD) would yield results.

In a meeting with Finance Minister P Chidambaram, India’s  executive directors at the World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB) discussed a long-term strategy for a greater degree of interaction with the government.

The government means business—was the broad message given at the conference. In a session on “Indian Economy”, all issues currently affecting the economy and the measures taken by the government to manage the situation were broadly discussed.

The finance ministry made the executive directors and their advisors aware of various measures the government has taken in the last one month. The measures to restrict capital outflows have been perceived as capital controls by the ministry. The content, implication and rationale behind these measures were explained to India representatives at multilateral institutions.

The strategy for engagement with other international bodies like G20 and regional groupings like Saarc and Asean was also discussed. The approach to develop various projects, too, was discussed in the meeting which was also attended by representatives from the private sector.

“We discussed stepping up infrastructure funding to India by these institutions and how to increase the participation of the private sector in their projects, not only in India but across the world,” a person who attended the meeting told Business Standard on condition of anonymity.

The finance minister, who attended the inaugural session of the two-day conference, stressed on meaningful exchange of ideas and taking actionable decision. The executive directors, on their part, shared their views and their institution’s perspective of India.

Though the meeting is part of the finance ministry’s annual interaction with the country’s representatives at these global institutions, this is the first time all three executive directors met the finance minister together in India. Till now, the three executive directors were operating in silos and one did not know what the other was doing.

The idea is to update the executive directors on the current thinking of the government of India and to bring all three institutions on the same page.

The meeting assumed significance amid continuing fall in currency and equity markets. The rupee has breached the mark of 64 against a dollar and markets have lost significantly on fears that the government would bring capital controls. The government is trying to restrict the CAD at 3.7 per cent of the gross domestic product this year. It touched an all-time high of 4.8 per cent in 2012-13.