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India upbeat on growth, global markets crisis a concern

India is confident it can sustain growth of 9-9.5 per cent in Asia's third-largest economy but a global financial crisis could dent expansion, Prime Minister Manmohan Singh said on Friday.

business Updated: Jan 25, 2008 15:03 IST
Unni Krishnan

India is confident it can sustain growth of 9-9.5 per cent in Asia's third-largest economy but a global financial crisis could dent expansion, Prime Minister Manmohan Singh said on Friday.

Slowing of the US economy has worried investors and policymakers and concerns have also surfaced that the US downturn was spreading to the 15-nation euro zone economy.

India, one of the fastest growing major economies after China, has expanded at an average 8.6 per cent over the past four years.

"We are living in an increasingly inter-dependent world and the crisis in international markets can have impact on growth of emerging economies, including India," Singh told a joint news conference with visiting French President Nicolas Sarkozy.

"The economic fundamentals of India are sound and as of now we are convinced we can sustain 9-9.5 per cent growth."

Singh's economic advisory panel feels a slowdown among developed economies may not have a major impact on India but pressures from high oil and food prices will make managing inflation a challenge in 2008/09.

The panel in its review of the economy said the Indian economy is much less dependent on external markets than China's, and a slowdown in exports is unlikely to be large enough to depress growth.

India's economy is largely driven by domestic demand with exports playing a relatively minor role. It grew 9.4 per cent in the 2006/07 fiscal year, its strongest in 18 years and second only to China among major economies.

But annual growth dipped to 8.9 per cent in the September quarter, falling below 9 per cent for the first time in three quarters, as industrial output slowed due to monetary tightening designed to trim inflation.

Most forecasts peg India's growth at around 8.5 per cent for the fiscal year ending March 2009, slower than the scorching 9.4 per cent in 2006/07 and a unit of ratings agency Moody's forecast growth at 8.0 per cent for 2008.