The financial crisis in Dubai World is not big enough to destabilize the world economy, Finance Minister Pranab Mukherjee said on Saturday.
“The amount involved is so small compared to the size of the world economy that it might not have any major impact,” he said. Pranab made these remarks while delivering Haksar Memorial Lecture at the Centre for Research in Rural and Industrial Development, a policy think tank at Chandigarh.
“Let us not press the panic button. Let us wait and watch.”
Dubai World, Dubai’s flagship state-owned company for global investments, has announced that it will delay repayment of loans worth $59 billion (Rs 2,76,000 crore). This has spooked financial markets and led to a worldwide stock market crash.
Of particular concern to India is the possibility of many of the one million Indians in the UAE losing their jobs. This could impact remittances that fuel a significant segment of the Indian economy, Mukherjee admitted. About 12 per cent of India’s total remittances are from the United Arab Emirates.
But Mukherjee played down these fears. “India is not going to face any impact in terms of inflows from foreign institutional investors and foreign direct investment. Our exports, too, will not be badly hit,” he said.
Turning to India’s stand on global warming, he said, “Developing countries need green technologies at affordable prices. The funds required for this should come from the developed countries as decided earlier.”