As measures to curb outward capital flows backfire and the economy sinks further, the government is trying to get an international perspective on the problem.
In a meeting with India’s represen Wednesday and Thursday, Finance Minister P Chidambaram will reflect upon the current economic situation and get their views on the issues.
India’s executive directors(EDs) at these global institutions — Mukesh Prasad at the World Bank, Rakesh Mohan at the International Monetary Fund and Umesh Kumar at the Asian Development Bank — will meet the minister and officials from his and other infrastructure ministries at the conference. This is the first time all three EDs would be meeting the finance minister under one roof.
Beside a discussion on the state of the Indian and global economies, the conference will focus on stepping up infrastructure funding to India by these institutions.
“Till now, the EDs were operating in silos. One did not know what the other was doing. Now, everybody will come together and discuss India’s current negotiations with multilateral institutions, G20 developments and infrastructure financing requirements, among other issues. There will also be a session on the Indian economy,” said an official.
Though the meeting is part of the finance ministry’s annual interaction with India’s representatives at these global institutions, the difference this time is that it is being held here, with all three of them together. Such interactions usually take place when the Eds visit India or when the finance minister is in Washington or Manila to attend their annual meetings.
“The idea is two-fold—to update the EDs on the current thinking of the government and to bring all three institutions on the same page. The EDs will also giver feedback and update the government on concerns about the economy,” the official added.
The EDs will make some presentations and infrastructure ministries, such as roads, will be present at the conference; their concern is also the extent of financing available for them.
The meeting assumes significance amid the continuing fall in currency and equity markets. The rupee has breached 63 to a dollar and the markets have lost significantly on fears that the government would bring capital controls. The reaction came after the Reserve Bank of India put restrictions on capital flow out of the country.
The government is trying to restrict the current account deficit at 3.7 per cent of gross domestic product this year. It touched an all-time high of 4.8 per cent of GDP in 2012-13.
The EDs have a dual responsibility, as representatives of the multilateral institution’s member-country that appointed or elected them, and as officials at the institution, representing interests and concerns of their respective countries.
Finance ministry officials are also in touch with other officials of these institutions. There are murmurs that India might seek some assistance from these institutions but ministry officials deny it. However, any such talks are usually kept secret till as long as feasible.