India Will Not Be Affected By the U.S. Downturn
Sept. 24 – In a bid to avoid letting India's soaring economy slip due to the U.S. downturn, Prime Minister Manmohan Singh called for strengthening "surveillance" of multilateral institutions within India.
"We need to strengthen multilateral surveillance for free market economies to function properly. For that multilateral institutions need to be strengthened," the prime minister told the Hindustan Times on board his special aircraft enroute to the United Nations General Assmebly meeting in New York.
The head of the planning Commission and the Prime Ministers chief aid, Montek Singh Ahluwalia stressed that India's strong economic fundamentals will insulate it from the global financial crisis and underlined that the government was hopeful of bringing inflation down to single digit level by March next year.
"Inflation is not something which we can bring under control immediately. Fortunately, the tendency of constant increase (inflation) has disappeared," Ahluwalia told reporters. India's inflation which hit 12 percent this year is the prime concern of policians who will face a national election next year.
Ahluwalia also played down fears of the downturn in global economy impacting India, he told the Hindustan Times, "The Indian banking system is not directly related to it. The estimated exposure is very small and a direct impact almost negligible."
The large foreign exchange reserves will help India to tide over a temporary economic downturn, he said. High savings rate and a reservoir of management and entrepreneurial skills are some of India's strong economic fundamentals that will insulate India from the global financial meltdown, he stressed.
However, if the downturn continues for long, it will affect the flow of foreign investment into India, he said.
"This has vindicated that we should go ahead with reforms but in a gradual, calibrated manner. Over-enthusiastic liberalistion can lead to problems," he said.
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