India has asked the International Monetary Fund to take the lead in resolving the financial meltdown to steer off possible recession, saying any delay in addressing liquidity concerns could cause solvency problems.
"The recessionary trend is slowly becoming a reality with the twin threats of the financial markets crisis and consumer anxiety... Crisis has triggered serious liquidity problems, with the money market interest rates shooting up.
"If not addressed with speed and determination, the prolonged liquidity concerns could turn into solvency problems, further jeopardising the stability of the global financial system," Finance Minister P Chidambaram said in his formal statement to the International Monetary and Finance Committee here on Saturday.
Reserve Bank of India Governor D Subbarao tabled the speech of Chidambaram, who had to cancel his visit to assuage fears at home about the global financial storm hitting the Indian shores.
The call to the multilateral funding agency to anchor efforts to restore confidence in financial markets comes even as G-7 leaders pledged to fight the credit crunch. India noted that there were a number of concerns over the attempts to resolve the current crisis spawned by defunct mortgages in the US.
Chidambaram said that although the Fund's role in the crisis was so far perceived to be "peripheral," the IMF should gear up to meet the borrowing needs of member countries engulfed by the crisis.
"The financial institution (IMF) should have the mending instruments and the financing capacity to address potential borrowing needs," according to Chidambaram.