Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Home Page / India won’t be affected much by Dubai crisis: Pranab
BackBack

India won’t be affected much by Dubai crisis: Pranab

India won’t be affected much by Dubai crisis: Pranab

Premium

Chandigarh: Dubai’s debt crisis will not affect India much but the government is keeping a close watch and will act to prevent any fallout, the finance minister said on Saturday.

“The impact cannot be much as our stake is so small and the amount involved compared to the world economy is miniscule," Pranab Mukherjee told reporters in the northern city of Chandigarh, where he was delivering a lecture.

“Watchful and effective intervention at the appropriate time can avert some immediate crisis," he said.

Indian stocks and the rupee were rattled on Friday after Dubai’s woes stoked fears over corporate exposure to a key trading partner and that foreign funds would lose their appetite for risk.

The United Arab Emirates (UAE), of which Dubai is part, is the second-biggest export destination for India and accounts for 10-12% of India’s inward remittances.

Mukherjee said the emirate’s problems could force a return of Indian citizens, who make up more than 40% of the UAE’s population.

Stimulus unsustainable

Mukherjee said the stimulus measures that buoyed the economy in the wake of the financial crisis were unsustainable and the government would have a roadmap by December to consolidate its fiscal position over the next five years.

The firefighting policies by Asia’s third-largest economy have contributed to a bulging of the fiscal deficit to a projected 6.8% of GDP for 2009-10.

“This level of fiscal expansion can only be a short-term response and is unsustainable on a long-term basis," Mukherjee said in his speech.

Prime Minister Manmohan Singh has said India would likely wind down its stimulus measures next year.

The Reserve Bank of India has already started what it calls the first phase of the exit from its easy monetary policy, worried about inflationary pressures.

India’s economy was set to grow at 6-7% in the financial year to March and the government was efforting a return to the 9% growth rate seen before the crisis clipped the pace of expansion, Mukherjee said.

The worst of the financial crisis seemed to be over and there would not be a lasting impact on India’s development outlook over the medium to long term, he said.

“The caveat is a sustained recovery of the developed countries from the current crisis," he said.

Mukherjee also said the central bank had intervened in the forex markets to stabilize the rupee after the crisis.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 28 Nov 2009, 03:53 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App