Washington: India is ready to buy about $10 billion (around Rs50,000 crore) of International Monetary Fund bonds, the Wall Street Journal said quoting planning commission deputy chairman Montek Singh Ahluwalia.
“If the IMF can issue the securities, it’s an easy way for us to make a contribution,” said Ahluwalia, who is in the US to attend the Spring Meetings of the IMF and the World Bank.
The IMF is finalising plans of its first bond offering and is lining up BRIC countries including Brazil, Russia, China and India as purchasers. The bond would be sold to the central bank, not to individual investors.
Ahluwalia told the Journal that buying bonds is a better alternative for India than making the IMF a loan as Japan has done. That’s because the Indian central bank could simply purchase the bonds and hold them in its reserves. That wouldn’t require separate Indian government approval.
“Separately, Ahluwalia said that he believes India could grow more rapidly than the 4.5 per cent the IMF forecasts for India this year and 5.6% for next year,” the WSJ said.
The report further quoted Ahluwalia as saying that Indian banks are relatively in good shape, though their lending is still constrained. The government, he added, stands ready to increase fiscal stimulus, although the amount depends on the outcome of the Lok Sabha elections.
”We are both capable and interested in doing more stimulus,“ Ahluwalia said.
Brazil and Russia haven’t said how much they are likely to spend on the bonds. British Prime Minister Gordon Brown said at the G-20 summit earlier this month that China would chip in $40 billion. But there is debate within China about whether that would be too large a purchase.
Reserve Bank of India Governor Duvvuri Subbarao has said that emerging countries should “get a bigger share in the management of the IMF reflecting their growing strength in the economy.”
Efforts to triple the IMF’s resources to $750 billion are coalescing and the BRIC countries have joined in seeking to contribute through a bond offer to help the IMF as a temporary measure as they push for a stronger voice at the institution.