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G-20 meet: Jalan stresses on stable macro fundamentals

The Reserve Bank of India Governor said on Saturday a stable macro-economic environment was essential to prevent financial crises and sought automatic access to global funds for countries facing such problems.

"A stable macro-economic environment with low inflation, low current account deficit and reasonable growth is essential to prevent crises," Bimal Jalan told a meeting of the Group of 20 nations in New Delhi.

He said India met all three parameters with inflation around three per cent, current account deficit below one per cent and growth above five per cent.

Jalan urged international institutions and the global community to play a supportive role by providing higher and more automatic access to funding to countries facing financial crises.

He said short-term banking capital should be avoided for financing investments and growth while foreign direct investment and portfolio investment have to be encouraged in capital account management.

The governor also said flexibility in exchange rates was needed so that the central bank has the ability to intervene "if and when necessary".

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