India pledges $10 bn to IMF for Eurozone

Los Cabos (Mexico) : India Monday pledged $10 billion to the International Monetary Fund (IMF) to help Eurozone countries out of the current crisis and prevent adverse fallout on emerging economies.

“The International Monetary Fund has a critical, supportive role to play in stabilizing the Eurozone. All members must help the fund to play this role,” the prime minister told the G20 Summit here.

“I am happy to announce India has decided to contribute $10 billion to IMF’s additional firewall of $430 billion,” he said, also appealing to countries with surpluses such as China to make similar contributions.

The prime minister began by congratulating the new government in Greece that is about to take office, as it has given hope that the debt-laden country will stay in the Eurozone and take up critical reforms.

“We wish them well and are encouraged by the early statements of intent.”

He, nevertheless, said the crisis in Eurozone remained worrying, as it was pulling down even emerging economies such as India and China, which were earlier on a high growth path.

“This calls for policy action on several fronts. Of greatest concern at present is the uncertainty affecting the Eurozone. The sovereign debt crisis and the banking crisis now on the horizon have grave implications for the health of the entire global economy.”

The prime minister again laid emphasis on infrastructure investment as he had in earlier G20 Summits, saying less developed and emerging economies were also facing serious problems because of the global crisis.

“Infrastructure investment in developing countries assumes special importance in this context. It lays the foundation for rapid growth in the longer term, while providing an immediate stimulus for their economies and also for the global economy, by providing a robust source of demand.”

But more infrastructure investment in developing world is only possible if they get access to long-term capital, he said, adding: “Multilateral development banks can play a major role in this context.”

Efforts were underway in India to spruce up infrastructure with massive investment and ambitious targets, he said.

The prime minister said while the performance of the Indian economy, now growing at 6.9 percent as against 8.4 percent in 2010-11, may look good to the world outside, it was not enough and that citizens expected more.

“Yet the fundamentals of the Indian economy remain strong and we are confident of bringing back the rhythm of high growth of 8-9 percent per annum.”