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Lift sanctions, it's better for both of us, India tells US

Finance Minister Yashwant Sinha has expressed hope that the Clinton administration would soon lift the sanctions it had imposed on India in protest against its May nuclear tests, saying their continuation is neither in the best interests of the United States nor India.

Sinha, who is in the US in connection with the World Bank-International Monetary Fund annual meetings, told a press conference last night that the sanctions had their effect more in terms of sentiments and confidence than its direct impact on the economy.

''We are looking forward to the day when our position will be better understood here and there will be greater understanding in the near future and sanctions will be lifted,'' he added.

He recalled how India's trade with the US had been flowering before the imposition of sanctions four months ago. For the first time, their two-way trade had crossed the ten billion dollar mark.

Replying to a question, he said India had not felt the impact of the sanctions. There was no impact in the area of bilateral aid, which was negligible. Then, the way the US had interpreted the law governing the sanctions was helpful to India. Moreover, India's economy is big and diversified.

Sinha said the net impact of the sanctions was in the denial of credit facility by the US Export-Import Bank to investors in India because of which some projects had initially been affected.

Obviously, there is no immediate impact of the sanctions as such but he indicated that in the long run, they were bound to tell upon the economy.

Replying to another question, he said the current price increase or the fall in the value of rupee had nothing to do with the nuclear tests. ''We have managed the export market in an extremely cautious way and we have been able to maintain orderly conditions which prevented the free fall of the rupee,'' the minister remarked.

He, however, was worried at the rise in inflation which, he said, had touched eight per cent. He attributed this phenomenon to the steep rise in prices of primary goods.

Sinha, who had a series of meetings with his counterparts from other countries including US Deputy Secretary of the Treasury Lawrence H Summers, and World Bank president James Wolfensohn and IMF managing director Michel Camdessus, said he was returning home satisfied. This had been a successful visit. ''I am very happy with its outcome,'' he added.

He also attended the deliberations of the Group of 22 where he had an opportunity to interact with US President Bill Clinton who presided over the meeting.

He said India had taken position about the global financial crisis and most of the points he made found acceptance at the Bank-Fund meetings. Moreover, the communique of the interim committee, the policy-making body of the IMF, had acknowledged the fact that India had been able to maintain its high growth rate despite the Asian crisis.

The minister said India escaped the crisis mainly because of its good economic management. The main lesson of the Asian crisis was that a country must learn to manage its economy.

International action could not be a substitute to good management.

Replying to a question about India's interaction with the European Union, he said: ''We've very extensive relationship with the Union and it continues. Both our trade and investment have of late been growing.''

Earlier, speaking at the annual Fund-Bank meeting, Sinha criticised the multilateral institutions for their failure to cope with the global economic crisis. ''The brute fact is that after five days of intense discussion and debate, we are still at a loss as to why contagion has continued to spread. Nor do we seem to have achieved clear, agreed and effective measures to contain the crisis, a crisis which has grown unrelentingly over 15 months,'' he added.

He said, ''I wonder if our apparent ineffectiveness in coping with this present global crisis could be due to the limitations of the Bretton Woods institutions in handling crises spawned by massive reversals of private capital flows in a highly integrated global capital market, where billions are transferred in an instant with a computer key-stroke.''

Confronted by the new generation of crises impelled by massive volatility in the capital account, the systems and resources at the command of the Bretton Woods institutions have been found wanting.

''We must find ways to better reflect the political dimension of crisis management in the decision processes of the Bretton Woods institutions, especially since the enduring economic and social consequences of crisis pose severe challenges for political management, he added.

UNI