Contingency Fund Mooted

The senior economic advisor to the ministry of finance, Arvind Virmani has mooted the idea of setting up a crisis for a contingency fund for overcoming financial problems in future.

While addressing the gathering at the meeting yesterday, he outlined the Indian perspective of the global debt and currency crisis.

We are merely throwing up an idea for discussion. Various issues have to be taken into account before any such fund is set up, he said.

Dwelling on the issues involved in the current Asian crisis, Virmani felt there is a need to phase internal and external financial liberalisation. Indonesia went for an early external liberalisation.

The Asian Credit model was of directed or guided nature and of control mentality. There is a need for banks and markets to function in a smooth and transparent manner, he said.

He said the fundamentals of the Indian economy are strong enough with low current account deficit (1.5 per cent), short-term debt is low and present value of total debt will pose no rollover problem.

The banking sector is witnessing improvement in profitability of the public sector banks, non performing assets are declining and marginal NPAs are comparable to international standards, no exposure to real estate lending and low exposure to stock lending, he added.