BANGALORE, June 16: India’s central bank governor Bimal Jalan said on Monday the country’s economy is in a comfortable situation and there is “tremendous confidence” in the external sector.

“The Indian (economic) situation is very comfortable just now,” Jalan told reporters on the sidelines of the Asian Clearing Union summit in this southern Indian city of Bangalore.

“There is general appreciation... that India is one of the fastest growing economies despite drought and other problems,” he said.

The central bank expects the economy to grow six per cent in the year to March 2004 after an estimated 4.4 per cent in the year to March 2003 when a crippling drought hit agriculture, undercutting a strong performance by the industrial sector.

“There is tremendous amount of confidence in the external sector. The policies being pursued by many of our member countries (in the Clearing Union) are similar to those we had initiated some years ago,” Jalan said.

“On the whole, it is a positive atmosphere to hold this meeting in,” he said.

India’s foreign exchange reserves are now more than 80 billion dollars and earlier this month the government said it would cut back debt as part of efforts to prune a huge fiscal deficit that has till now dragged on the economy’s growth.

India’s total outstanding overseas debt stood at Rs663 billion (13 billion US dollars) at the end of the financial year to March but the increase in the foreign reserves has given it the confidence to repay part of the borrowings ahead of schedule.

India has made slashing its budget deficit a high priority and has set a fiscal deficit target of 5.6 per cent of gross domestic product (GDP) in the fiscal year ending March 2004.—AFP