NEW DELHI: India’s Finance Minister Pranab Mukherjee and visiting US Treasury Secretary Timothy Geithner signed an agreement on Tuesday to launch a comprehensive economic partnership to boost their bilateral engagement, with key focus on micro-finance and infrastructure development.

The agreement, similar to one the US has with China, comes days after Geithner delayed publication of an annual currency report in which US legislators had demanded that China be named as a currency manipulator. United States Congressmen have argued that Beijing deliberately holds down the value of its yuan currency to boost Chinese exports. Geithner has sought to nudge the Chinese to revalue their currency by pegging it to a basket of currencies but, according to Chinese analysts, the value of the yuan will be determined by China’s domestic economic compulsions and not US pressure.

Geithner, who spent five years of his childhood in India and has a reputation as an achiever, has publicly stated his appreciation for the way India has managed its economy to swiftly tide over the worldwide recession and maintain a high growth rate. The US has begun to emerge from the recession, recording growth levels over the past three quarters, but unemployment levels remain unacceptably high, so the Obama administration is looking to generate employment through large-scale spending on infrastructure and healthcare.

The launch of the US-India Economic and Financial Partnership today is significant because the two countries have traditionally been wary of opening up their markets and services to each other. It took almost 20 years for the United States to lift a ban on imports of Indian mangoes, for example, and the civil nuclear cooperation deal, which would allow energy-deficient India access to not only nuclear but a host of advanced technologies, has still not cleared all the legal hurdles. Increasingly, US companies are looking to the Indian market to expand their profiles.

After meetings with Prime Minister Manmohan Singh and Mukherjee, Geithner sought more widespread economic engagement with India, saying the ability of the US and India to cooperate was critical to creating a more stable global financial system.

“Our ability to cooperate on economic financial issues will be critically important to the success of global efforts to create conditions for a more stable global financial system... a more open global trading system,” Geithner said, adding that President Barack Obama remains committed to strengthening the US’ relationship with India, which he said was “an indispensable partner in securing the future prosperity and security of the world.”

In a statement at a joint press interaction with Mukherjee in New Delhi Geithner said, “We face many challenges in common, such as how... to extend financial services more broadly to people outside the traditional banking system, how to finance our very substantial public infrastructure needs... and effectively leverage private money.” Prime Minister Singh has said India would need to spend $1 trillion for infrastructure development in the next plan between 2012 and 2017.

The US has separately been demanding greater access to the Indian financial services market, including insurance — which could be used to fund infrastructure.