India on Thursday said it is watching the situation following the resignation of International Monetary Fund Managing Director Dominique Strauss-Kahn, who is facing charges of sexual assault in the U.S.

“Strauss-Kahn has tendered his resignation... We are watching the situation,” Finance Minister Pranab Mukherjee told reporters here.

Battling damaging allegations of sexual assault, Dominique Strauss-Kahn tendered his resignation from the top post of the IMF on Thursday, while maintaining that he was innocent.

Planning Commission Deputy Chairman Montek Singh Ahluwalia is being talked about as one of the contenders for the post of the next IMF chief, besides Kemal Dervis of Turkey, Christine Lagarde of France, Trevor Manuel of South Africa and Britain’s Gordon Brown.

Talking to the reporters on Wednesday, Chief Economic Advisor Kaushik Basu said, “In my view, Montek is the best name... not only from India’s point of view, but from the world’s point of view also.”

The IMF is likely to decide on a new Managing Director soon.

At present, John Lipsky, the First Deputy Director, is the acting Managing Director of the agency.

Earlier this week, Strauss-Kahn, 62, was charged with a criminal sex act, attempted rape and unlawful imprisonment.

Strauss-Kahn was taken into custody a few minutes before his Air France flight departed for Paris on Saturday.

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