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India's domestic demand helped contain global crisis: Pranab

business Updated: Nov 15, 2009 15:58 IST

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Finance Minister Pranab Mukherjee said India's large domestic demand helped insulate the country against the worst of the global crisis and the effort now is to bring the economy back to 9 per cent growth.

"The Indian economy has shown remarkable resilience to the crisis because the financial system had no exposure to the toxic assets," Mukherjee said, adding policies were also in place to prevent build up of debt.

Developing countries were in no way responsible for the crisis but have been the hardest hit, the minister said, adding India has also been affected "but fortunately not as bad as some others."

He said India's growth is largely domestic economy driven, with merchandise exports accounting only about 15 per cent of GDP.

"The extent of globalisation, however, has increased over the years, which has been responsible for the setback that the economy received due to external shocks," Mukherjee said while speaking at the Kadirgamar Memorial Lecture here.

Speaking on "Economics as a Driving Force of International Relations," Mukherjee said foreign borrowing in India was regulated through External Commercial borrowing guidelines.

This, he said, regulated the end-use and encouraged borrowings with lower interest and longer maturities.

"This has prevented build up of debt to unsustainable levels and contained surge and reversal of flows seeking interest arbitrage," Mukherjee said.

Overall, he said, the economic growth in India was expected to be in the range of 6-7 per cent in 2009-10, despite the setback due to poor monsoon.

"The effort now is to bring the (Indian) economy back on the growth path of 9 per cent per annum," the Indian Finance Minister said.