India should keep the option of seeking a line of credit from the International Monetary Fund (IMF) open to help fix the economy against the backdrop of a weak external situation,former governor of the Reserve Bank of India Bimal Jalan has said.
We have to keep all options open. And the reason for that is essentially,if you have seen Europe… When there was a pressure in the European markets,there was high deficit,high public debt and then International Monetary Fund pumped in money there,which stabilised the situation somewhat, Jalan said when asked whether India should explore the possibility of approaching IMF for money.
There have been suggestions that one way of shoring up depleting forex cover as well as getting some foreign exchange to finance the widening current account deficit is to be ready to borrow from the IMF in future,if required.
The IMF had bailed out New Delhi from balance of payment crises on more than two occasions,although several experts say that the country is in far stronger position compared to those times.
Indias foreign exchange reserves decreased by $1.08 billion to $277.72 billion for the week ended August 23,according to the latest data from the RBI.
The rupee has continued to weaken against many foreign currencies,particularly the US dollar,despite a series of measures announced recently by the RBI and the finance ministry.
The worst performer in Asia,the rupee had touched an all time low of 68.80 to a dollar earlier in the week.