The International Monetary Fund (IMF) today pinned hopes on Indian and Chinese economies to drive the global growth, even as it wanted New Delhi to push up reforms in financial sector and prune its debt.
"I think the Indian Economy is doing really well ... Has done well during the crisis and coming out of the crisis in rather good shape," IMF Managing Director Dominique Strauss-Kahn told a private news channel.
He said the policies followed by the Indian government are doing well.
"India, along with China, will help the global economy to go forward and have higher rate of growth," Strauss-Kahn said.
He, however, that there are certain areas of concern regarding India.
"Of course, there are several problems including the openness of the economy, especially the openness of financial sector, the public debt which is still in discussion that we have with Indian authorities. There are many questions on which we may provide advice and go on to further discussions with the authorities," the IMF MD added.
Strauss-Kahn added that solutions in the present circumstances have to found at a global level.
"...What you do in your own economy is one thing but now we are in the globalised world and even if a large part of the Indian economy is a bit separate from the globalised world, another large part of the Indian economy which is directly in the globalised world. So there is no domestic solution to a global problem," he said.
He added: "It's difficult to imagine today a country, however big, that will be able to manage their own economy without looking at the consequences, what it is doing to others. We are developing here at IMF new kinds of reports, which we call, spill over reports, which have the objective to try to see the policy which you implemented in your own country and its consequences on others."
Strauss-Kahn said the global economic recovery still has some way to go and risks exists in many parts of the world.
"Our base line is that the recovery will go on -- not very rapidly -- maybe somewhat slower than what we could have expected one year ago and even in Asia including South Asia, India, South America, even Africa, it’s a bit sluggish."
This kind of a situation could lead to imbalance and pose threat to recovery, the IMF MD said. "So from this point of view, we are not out of woods. We still have downside risks."
Regarding the Chinese currency devaluation, he said: "The renminbi was substantially undervalued and part of the solution to the problem of the global economy, only part of it, is go through revaluation of this currency."
He added that China's decision to address the crisis by rebalancing its economy and shifting from totally export led growth model to more domestic led growth model are in line with the idea of revaluating the Renminbi.
"I think that the Chinese authority has clearly in mind that the direction is the direction of the revaluation of their currency. The speed is at stake and discussions are going to take place including at these meetings here in Washington," Strauss-Kahn said.
