Medium-term fiscal consolidation priority for India: IMF

India may not be in a position to loosen its fiscal policy to ight the possible economic downturn, as medium-term fiscal consolidation remains a priority, International Monetary Fund Managing Director Dominique Strauss-Kahn said today.

"India already has very high growth and a still high public debt and medium-term fiscal consolidation remains a priority," Strauss-Kahn said.

The IMF managing director was addressing a seminar on Lessons from the financial mrket cisis.

The Indian government is aiming to reduce fiscal deficit to 3 per cent of gross domestic product and eliminate revenue deficit by 2008-09 (Apr-Mar).

Strauss-Kahn said he did not think that the emerging economies were immune to the current global financial crisis and neither did he believe that the emerging economies have decoupled and would move forward despite the global problems.

"Some may say that emerging economies have now decoupled from industrial economies. They would argue that growth in major emerging economies like China and India is now such a powerful engine that it can continue to move forward without the large industrial countries. I don't think so"”at least, not yet," he said.

He also said the crisis has complex financial linkages and spillovers for countries such as India.