Indian economy has a stable system to cope with frequent changes in the political arena to pursue the growth agenda, International Monetary Fund executive director Y V Reddy said on Saturday.
"The multilateral agency keeps raising three issues concerning India -- political stability, fiscal deficit and exchange rate flexibility -- and I told them that India has a stable system in place," Reddy, former Reserve Bank of India deputy governor, said after receiving the Bombay Management Association Award for "outstanding contribution to the financial sector."
"Since 1991, no political party had a majority at the Centre, still we have seen many reforms in the economic sphere", he said and quipped, "we have stable instability."
The decentralised system has a resilience to deal with wide range of changes, he added.
India's external debt was much high compared to the foreign exchange reserves in the early nineties and now the reserves position is good, Reddy added.
On the exchange rate, he said, "It is difficult to say exactly what is the appropriate rate." RBI deputy governor Rakesh Mohan said Reddy had helped to benchmark Indian financial standards with those of international ones.
Mohan pointed out that the Bank for International Settlement was using a formula, developed by Reddy, to assess how much foreign exchange reserves a country should have.