India To Seek Debate On Imf Conditionalities

India will force a debate on the current practice of following uniform conditionalities and press for a consensus on combating the global meltdown caused by unrestricted short-term capital flows at the upcoming annual meetings of the World Bank and International Monetary Fund.

Stating this, finance minister Yashwant Sinha said India would continue to be insulated from the ongoing global meltdown and ruled out any crisis of the magnitude that had occurred in East Asia.

"We will raise the issue of IMF conditionalities. It is our view there is no universal or uniform solution,'' the minister told newsmen here yesterday.

He will be leading a delegation which includes finance secretary Vijay Kelkar and Reserve Bank of India governor Bimal Jalan.

The finance minister will leave today for Canada to attend the Commonwealth Finance Ministers conference before proceeding to Washington for the annual meetings. "There is need for consensus on management of short-term loans and it is all the more so when capital becomes freely movable without any other consideration," he said.

To achieve this, the existing international financial architecture would have to be redefined, he said. At present, he added, almost everyone was engaged in setting out a strategy to tackle the havoc arising out of the unrestricted movement of capital. India, which had emerged relatively unscathed from the East Asian crisis, would continue to remain insulated, he said.

"India is very safe because of the cautious management of our policies on the external economic front," he said. The minister ruled out an East Asian or Latin American type crisis and said, `'we have enough strength to meet any situation. Besides the country's economic fundamentals are strong," he said.

According to him, India's insulation arose from the fact that it had very low levels of exposure on short-term debt and also because there was considerable transparency in its financial sector. The lack of full convertibility was not the only factor which insulated India from the contagion effect of the east Asian currency meltdown, he added.

The minister denied that India was going slow on full convertibility of the rupee because of the East Asian crisis. The Tarapore committee which recommended a three year time frame had wanted government to fulfill certain preconditions prior to the introduction of full rupee float, he said. "We have to strengthen fundaments to fulfil these and once that happens rupee would be made fully convertible," he said while adding that the government had not accepted the three year time frame.