IMF says RBI policy 'appropriate'

Terming the Indian growth pattern as "impressive", the IMF has said it does not foresee overheating of its economy as long as the current monetary policy is in place, and its "independence is strengthened".

"(India's) growth has been impressive - 9.7% in 2006, 8.9% in 2007 and we are viewing it at 8.4% in 2008. That is really an impressive growth pattern," IMF managing director Rodrigo de Rato said addressing a press conference in Washington, United States, ahead of the annual meetings of the International Monetary Fund and the Word Bank.

Asked whether he saw any chance of the Indian economy "overheating", de Rato said "We don't see that if monetary policy continues to behave as is behaving right now and independence is strengthened in monetary policy".

"With inflation coming up a bit in 2007, we think the monetary responses by the (Reserve) Bank of India have been appropriate... The credibility of the monetary policy in India has become better and stronger and the steps of the liberalisation of the financial markets of India are probably the  steps in the right direction," the top IMF official said.

The priorities for India down the road should be in keeping up with the drive towards further liberalisation like bridging major gaps in infrastructure, addressing the labour shortages in the skilled sector and opening up to foreign investment, he said.

De Rato noted that there has been flexible movement of Indian currency which is "good" for the country, adding that the confidence of investors in India is increasing.

(Reporting by Sridhar Krishnaswami)