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US Federal Reserve Chairman Ben Bernanke today said that India is becoming an important player on the G20 (Group of 20 countries) stage and promised to continue exchange of ideas. US Treasury Secretary Timothy Geithner and Bernanke met Corporate India leaders and Reserve Bank of India officials here and discussed the recent US policy measures like the quantitative easing and the economic climate in the country.
"India is clearly becoming a more and more important player on the world stage, in G20 context, in terms of its role in the global economy and I think it's very useful for us to continue exchange of ideas and build the basis for a future collaboration and coordination," Bernanke said. This is the first time a serving US Fed chief is visiting India.
Bernanke described his first ever visit to the country as "very constructive" and said he discussed policy challenges in both the US and India. "We talked of the global economy, we talked about the monetary and regulatory policies. We discussed some banking issues that we have mutual interest in," Bernanke said.
"We got briefed by both on the US economic situation. We briefed them on India...," CII president and Godrej Group Chairman Adi Godrej said after a breakfast meeting here. Vice-chairman and MD of IDFC Rajiv Lall said, "He (Bernanke) explained what the strategy for QE3 is and assured us that the implications are not going to be as large as people fear."
Welcoming Bernanke at the RBI headquarters, RBI Governor D Subbarao said the main criticism has been that QE is being continued beyond its usefulness. "What the US economy requires now is a fiscal stimulus, and further QE is no substitute for a fiscal stimulus. It would only stoke inflationary pressures down the line," he said. "A second criticism, in fact a corollary to the first one, has been the argument that stretching monetary policy to unconventional levels has obliterated the firewall between fiscal and monetary policies, with monetary policy increasingly becoming an extension of fiscal policy, thereby renewing concerns about the fiscal dominance of monetary policy," Subbarao said.