Reserve Bank of India Governor Bimal Jalan declared on Monday that India was one of the fastest growing economies in the world despite droughts and problems associated with the downturn in the global economy.

Jalan, who is in Bangalore to preside over the annual meeting of the Asian Clearing Union, told the media that the monetary policies initiated in the recent past were bearing fruits and were being followed by other member countries in the ACU region.

"The global economy is clouded by uncertainties. The major economies of the world are plagued by sluggish growth and are searching for ways to improve the performance. Compared to the industrialised nations, developing countries are faring better, and the Indian economy is growing faster than others with a consistent average growth rate of 4-5 per cent over the years," Jalan stated on the sidelines of the ACU meeting.

"The Indian economic situation is very, very comfortable," Jalan told reporters.

"There is general appreciation of the growth path and that India is one of the fastest growing countries despite a drought and all the problems associated with the world economy," he said.

"There is tremendous confidence in the external situation and on the policies being pursued in the external sector," he added.

India's foreign exchange reserves stood at a record $81.7 billion on June 6, latest date from the central bank showed.

With inflation under control, lower interest rates and comfortable forex reserves, the Indian economy is projected to grow by 6 per cent during the current fiscal year (2003-04).

Though there has been some appreciation of the Indian rupee, the external sector is well managed with a good current account position.

Referring to the role of ACU, Jalan said there was need for better volumes of trade among the member countries so that the system could be utilised to the full extent of benefiting each other.

Jalan, however, declined to comment on his future role after his present term with the RBI end in August.