"The performance of the Indian economy in the last two years was a positive surprise because its trade is closely linked to the South Asian countries and they devalued their currencies by nearly 50 per cent," Walter told reporters.

"I did expect India to suffer much more profoundly from non-devaluation. I thought the return of the Indian workforce from Asian countries would also burden the economy but they did not," he said.

The Indian rupee, currently 43.43 against the dollar, was at 35.50 Rupees in August 1997.

Walter said that if the economy could manage without a devaluation for the past two years, there was no reason for one now.

"But because politics may have its own compulsions, I don't rule out the devaluation," he added.

He said the Indian government's belief that the economy was back on a revival path was "a little optimistic".

"I think it is a little optimistic. India could face disinflation which would depress domestic demand, though there would be a surge in the external demand. But for a huge elephant like India, you cannot pull it by external demand alone."

He said the Indian and Chinese economies were driven by agricultural growth and influenced by factors like monsoon rains -- factors that did govern other developed economies.

"They are still big closed continental economies with great reliance on agriculture," he said.

Walter said that every time the Indian economy seemed poised for big strides, it got bogged down by political uncertainty.