Centre against IMF-states parleys

The finance ministry has turned down a request by the International Monetary Fund seeking to interact directly with states.

The ministry has pointed out that such deliberations can only be held with the central government.

The IMF had sought the interaction under its annual Article 4 deliberations. Under this clause, each member country has to annually collaborate with the Fund to assure orderly exchange arrangements and promote a stable system of exchange rates.

A team of senior IMF officials visited India last month to undertake a mid-year assessment ahead of the final discussions in October this year.

"The IMF seeks data on the gross capital formation, the gross fiscal deficit which takes into account the data from the Centre and the states. We provide them this information. As it is the deliberations have to be held with the Centre," a senior finance ministry official said.

IMF officials, however, pointed out that it does undertake interactions with states in countries with a federal structure. "The IMF had in fact recently visited provinces in countries like China and Vietnam," an official said.

IMF's keeness to interact with states this time around was on account of their positive cash position which stood at around Rs 49,000 crore as on March 31, 2006.

Officials said the IMF during its interaction with the central ministries had expressed concern over the artificially depressed inflation rate which was primarily on account of the government's decision not to allow a full pass through of the high crude oil prices.

"The Centre's recent announcement to constitute a pay commission is also a cause for concern," an IMF official said.