"India manages her monetary policy with caution and prudence and this had helped her not only to survive the east-Asian financial crisis but to keep growing at six per cent and enhance her foreign exchange reserves," Jalan said at a meeting here yesterday of the Institute of International Finance (IIF).

The IMF has extended the CCL facility for countries following correct economic policies but which expect that they may suffer from "the contagion effect" of troubles faced by other countries.

Jalan also said developed countries should refrain from imagining that what worked for them would also work in developing countries. Conditions in developing countries, he pointed out, are different.

The east-Asian crisis has brought out the risksfrom "excessive short-term flows" Jalan said adding that he was not against all portfolio capital.

However, he pointed out that short-term flows were different from short-term capital. There is need for greater prudential regulation of short-term capital, Jalan added.

Stating that India's short-term exposures have been very small, Jalan said the general view that india avoided the east-Asian crisis was because she did not have convertibility on capital account.

This did help India to manage the situation but on top of that, to deal with volatility in the external sector, the Reserve Bank had to take certain classic monetary measures.

Amidst all this, he emhasized, India has had one of the highest rates of growths in the developing world - six per cent last year and the same growth the previous year. In spite of the recessionary conditions in industry, the economy's rate of growth has been high and inflation is one of the lowest, lower than even last year's rate.

India's reserves are among thehighest. They are higher today than they were at the beginning of the Asian crisis two years ago by "a quite susbtantial amount." India did not get net portfolio investment last year compared to a year before but there was no reversal of capital flows, Jalan said.

Jalan also pointed out that India announces every week complete figures for her reserves and foreign liabilities.

He called for a clear recognition that developing country financial markets are very different from those of developed countris. The structure of the markets is different in the sense that there is much more "informality." This, he said, is different from "crony capitalism." There are simply much more of non-formal dealings among financial participants.

"Markets in developing countries are different from Wall Street or London. Destabilizing speculation by a few large players has a greater chance of success in a developing country than in a devleoped nation," Jalan said.

"The point is that markets in developing countries aredifferent. It has nothing to do with freedom or lack of freedom. Regulation is needed to make sure that markets work in the overall interest," he added.

Another factor to be borne in mind is that in a developing country, the approach to foreign currency is different from dealing with domestic currency. There is preference among many to hold foreign currency. This was brought out during the Mexican crisis when not only foreign but also domestic residents transferred a large volume of funds abroad.

"Once you recognize this, you have regulations," the RBI governor said.

At the same time, Jalan pointed out that once an investment is made in India, current account transactions are free from regulations.