NEW DELHI (AFP) ? India insisted on Saturday its economy would still grow strongly despite the "grave" situation created by Standard and Poor's decision to strip the United States of its top-rank AAA credit rating.
S&P sent shock waves across the world when it cut the US rating on Friday from AAA to AA+ with a negative outlook, saying US politicians had been unable to come up with a credible plan to tackle the country's huge debt load.
"The situation is grave," Finance Minister Pranab Mukherjee said.
But "our markets have the capacity to withstand the negative sentiments affecting the external world," he told business leaders in a speech in the Indian capital.
"There is a crisis but I'm not unnecessarily worried. There's no point in pressing the panic button," he said, a day after India's stock market plunged to a more than one-year low on worries about the global economy.
Mukherjee forecast Asia's third-largest economy would be able to match in the current year the eight-and-a-half percent growth it notched up in the previous 12 months to March 2011.
This would make it still the second fastest growing after China among major economies.
"Our growth story is intact and the fundamentals are strong," he said, promising to press ahead with the country's stalled economic reforms process to enhance India's attractiveness to investors.
India posted nearly seven percent growth during the 2008 global financial crisis, helped by substantial fiscal stimulus and a still relatively inward-looking economy.
While the economy has liberalised in the past two decades, it still remains largely domestically driven.
The latest global financial turmoil comes as India's government is battling double-digit inflation and as data shows the economy already showing signs of weakening under the impact of aggressive monetary tightening.
The central bank has raised interest rates 11 times since March 2010 as it struggles to douse inflation running at 9.44 percent, the highest in Asia.
Investor appetite for Indian assets has also been dented by a slew of massive corruption scandals.
Even before the US downgrade, many private economists were more bearish than the government about India's prospects with some projecting expansion as low as 7.2 percent.
While seven-to-eight percent growth is enviable by Western standards, experts say India needs at least 10 percent expansion to end widespread chronic poverty.
Anis Chakravarty, director of Deloitte Haskins & Sells in India, said the "only positive is that the other two (global) rating agencies have reaffirmed their AAA outlook for the present.
"If they follow S&P?s suit in the near future, the impact will be hugely adverse," he said.
Federation of Indian Exporters Organisations president Ramu Deora predicted the S&P downgrade would push up the value of the rupee against the dollar, "blunting our competitive edge" in the export market.
valium good morning america real housewives of new york icloud instagram us senate c span
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.