By TIOL News Service

NEW DELHI, OCT 16, 2017: WHILE participating in the IMFC Restricted Breakfast Session in Washington DC, the Union Finance Minister, Mr Arun Jaitley, yesterday appreciated the focus on cyber security in the Early Warning Exercise and emphasized that the entire global financial system is vulnerable to this threat, more so because it is so interconnected. In this regard, the Finance Minister highlighted three policy challenges. The first was the risks posed to emerging markets and developing economies (EMDEs) by the US Federal Reserve's bold steps towards restoring normal monetary conditions. The second was the global slowdown in Investments and the third was employment.

While discussing these challenges, the Finance Minister stated that he would urge the international community to make a fair and unbiased assessment of the macro-prudential and capital flow management measures available to and used by countries to manage short-term capital volatility. Besides, finding ways to revive investment is critical to sustaining global growth and collective and co-ordinated action needed to be explored in this regard. He also observed that India is currently one of the few large economies in the world in the virtuous phase of its demographic transition and the most important priority of the government was to find ways to provide employment to the 12 million young people entering the workforce annually.

Mr Jaitley also attended the IMFC Plenary Session focusing on the institutional issues. He highlighted the big structural reform initiatives taken by India – Goods and Services Tax (GST), Demonetization and Insolvency and Bankruptcy code. He also underlined that short term adverse impact of both GST and demonetization measures are mostly overcome and the recent data in manufacturing sector indicate that India's growth story is soon getting back to its normal course. He also mentioned about substantial reduction in both high value cash notes as well as cash as such in the economy thanks to demonetization. He expressed his mixed feelings at the apparent lack of progress in converging to a consensus on the Review of Quotas. To achieve such an outcome, he urged the Fund – the Board, the Management and the Staff – to diligently explore the space offered by the three objectives laid out in the IMFC Communiqué in October 2016: reduce misalignments, shift quota shares in favour of dynamic emerging economies and protect the shares of low income countries and small states.