IMF for tighter monetary policy in India

The fund issued a warning on soaring prices. "Some countries are at a tipping point," said International Monetary Fund Managing Director Dominique Strauss-Kahn at the release of a IMF report. The effect of price hike would be most acute for import-dependant poor and middle-income countries confronted by balance of payment problems, high inflation and worsening poverty, according to the study.

"If food prices rise further and oil prices remain the same, some governments will no longer be able to feed their people as well as maintain stability in their economies," he said.

Such countries needed help from the international community. "Their challenge is ours. It is to ensure adequate food supplies, while retaining the benefits from faster growth, low inflation, and better budget and balance of payments positions," he added.

Another senior IMF official however said the broad general policy implications apply to India, although it has not been flagged in the latest report.

"India is a large country and has reserves worth $312 billion. The near doubling of oil prices in a year will impact the current account," said Kalpana Kochhar, senior advisor in the fund's Asia Pacific department.

"India has not been highlighted because it has many mitigating factors. You have a deficit on the trade account, but are doing very well on the services front," Kochhar said.

While acknowledging that FIIs were pulling out of the country, she stressed the need for a global prospective.

"The capital account remains surplus... You hear stories of FIIs pulling out. They are pulling out, but you have to put that in perspective. It is happening in a number of countries.... So when I see equity investors pulling out of India, I don't necessarily have the same view as others. This is a part of a global phenomenon," Kochhar said.

"But the broad general policy implications apply to India as well