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Upbeat Geithner stresses on reforms

Last updated on: November 9, 2010 11:47 IST

Upbeat Geithner stresses on reforms

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Reforms are key to India sustaining the pre-economic crisis growth rate of 9 per cent, United States Treasury Secretary Timothy Geithner said in New Delhi on Monday.

"India has been growing pre-crisis at 8-9 per cent. It can achieve sustainable growth over time if there are more reforms in the financial sector," Geithner said at a conference of US and Indian captains of the industry.

There he also spoke about the risks facing the US economy, China and the upcoming G-20 summit.

India has weathered the economic crisis better than other economies, thanks to its good judgment, he said.

"There are a lot of capable people at the highest levels of the government. Thus, though the reforms' front looks promising, sustaining the growth rate needs more," he said.

Asked about reports that he was advocating early warnings to detect excessive trade accounts, he said they were true and justified his stand.

He said his call for the Group of 20 nations to accept and sign on 'indicative guidelines' was necessary because it was prudent to treat excessive trade deficits.

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Image: US Treasury Secretary Timothy Geithner.
Photographs: Andrew Winning/Reuters
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He also asked the G-20 nations to avoid pursuing competitive currency policies and rein in trade imbalances.

"It is important that the G-20 nations reaffirm, renew and reignite their commitments," Geithner said.

He, however, denied having asked the G-20 leaders to limit deficit to 4 per cent of the deficit, saying it is impossible to put a number to such an initiative.

"You can't set targets for such things," he said, explaining the proposal.

"However, If you care about growth, and stability, you also have to care about balance. If there is excess deficit and imbalance, then it is a problem."

Talking about the US economy, he said following a loss of momentum in the summer, there were still risks for the economy, but they were not as alarming as they were earlier.

"There will always be the risk," he said. "But if you see what the private forecasts are saying, then there is much less concern about a dip."

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Image: US President Barack Obama with Prime Minister Manmohan Singh.

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The basic tone of numbers suggest a modest growth, he said.

"Therefore, it is not alarming. The Americans, as they start earning better again, will definitely start spending," he said.

This will lead to a shift in capital from developed countries like the US to emerging countries like India, Brazil and China.

Such inflow of capital, Geithner said, while causing inflationary pressures, will be good for India's development.

The US will emerge stronger from the current economic crisis and India will be an engine of growth for global economy, he said.

Both the countries will have a major role in future of global economic development.

That is why, Geithner said, bilateral business partnerships are important for both.



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