India asks IMF to beef up resources to ensure 'future-proof global economy'

FM Arun Jaitley said India's balanced macroeconomic environment and strong growth prospects make it a 'bright' spot in the global scenario

As global headwinds continue to hit Indian and other markets, Finance Minister Arun Jaitley has asked advanced economies to be “mindful” of the spillover effect of their policies on the rest of the world.

He also asked the International Monetary Fund (IMF) to beef up its resources to ensure ‘future-proofing’ of the global economy against recurrence of financial crisis.

Speaking here at the meeting of the International Monetary and Financial Committee (IMFC) on Saturday night, Jaitley said India’s balanced macroeconomic environment and strong growth prospects make it a ‘bright’ spot in the global scenario.

Jaitley said the Indian economy has managed to put across a “credible” performance with an estimated growth rate of 7.6 per cent in the just concluded fiscal 2015-16, as against 7.2 per cent in the previous year.

“The growth performance is more credible given that it has been achieved despite contraction in our exports due to slowdown in global economy and two consecutive years of monsoon shortfall,” he said.

“However, there are concerns about export growth which is declining consecutively for more than a year due to slowdown in global demand,” Jaitley said.

The minister said subdued growth and low productivity in advanced economies (AEs) and elevated risks faced by emerging market economies (EMEs), as also risks of instability of financial system, are hurting global recovery.

“Flagging trade volumes, softening commodity prices, idle capacities and anemic economic fundamentals, particularly in a number of large EMEs are increasingly impairing their ability to sustain economic and financial resilience against rising risk premiums and credit risks.”

“Moreover, there are the risks of exogenous shocks from asynchronous normalisation of unconventional monetary polices (UMPs) that can produce disorderly adjustments in exchange and volatile capital flows — increasing the cost of managing external exposures and balance of payments.