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India still No 2 in growth rankings...

business Updated: Dec 23, 2008 20:30 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Bad sentiments are overweighing logic amid the country’s economic slowdown while India is significantly insulated from the global financial crisis, Suresh Tendulkar, chairman of the Prime Minister’s Economic Advisory Council, said on Tuesday, adding India was still second only to China in growth rate.

“Forecasts of gloom and doom are creating a vicious atmosphere among spenders and lenders,” Tendulkar said, and noted banks were not willing to lend in a “gloom and doom” mood. This could make slower growth a self-fulfilling prophesy, he said.

Tendulkar predicted inflation to be around 4-6 per cent by March end and said that economy is likely to improve in 2009. “A 100-basis-point (1 per cent) cut in the repo and reverse repo rates is desirable,” he added.

He was speaking at a conference convened by Small and Medium Business Development Chamber of India and Indian International Trade Centre.

“Our banks are well capitalised and our dependency on foreign capital is much less than other nations such as China,” Tendulkar said, observing that foreign exchange reserves were at a sound $250 billion level despite a fall from $316 billion last May after which foreign institutional investors pulled out large sums.