Saying that the global monetary crisis holds important lessons for emerging market economies like India, Finance Minister P Chidambaram said India’s challenges lay in reining in inflation without hurting the growth momentum, preserving financial stability and moving more vigorously on fiscal consolidation.
“With a real GDP growth at 9 per cent during 2007-08, the Indian economy continued to perform well,” he told the International Monetary and Financial Committee meeting here on Saturday noting that it was the third year in succession when the Indian economy achieved a growth rate of 9 per cent and above.
In the absence of the minister, who cancelled his trip in order to deal with the effects of the market meltdown on the Indian economy, his statement was read out by Reserve Bank of India (RBI) Governor D Subbarao.
The minister said in a globalising world no country can claim to be completely unaffected. “However, emerging market economies have been less affected so far by the crisis.”
“Their relative stability could be reflective of policy improvements, prudent practices, strengthened reserves, and the strong growth performance in recent years.”
“But the emerging market economies are not islands of tranquility and the crisis could be transmitted to them through multiple channels,” he warned.