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We are not immune: PM
Keeping India insulated from the ill effects of international financial crisis is the top most priority of the government, said PM Manmohan Singh, reports Varghese K George.
Keeping India insulated from the ill effects of international financial crisis is the top most priority of the government, said Prime Minister Manmohan Singh.
“We are not immune from what happens in the outside world,” said Singh during his return journey from a nine-day trip to the US and France. “But we are not vulnerable to the extent that some other countries are vulnerable.”
However, the crisis could result in a moderation of inflation, pointed out the PM on the brighter side of the situation. “If capital inflows decrease, if foreign institutional investors — because they need liquidity — take money out, that would certainly affect our stock markets, that would affect Indian corporates raising resources for investment. And if there is a recession in the developed world, particularly the United States, it could hurt our exports. We have to work out a coherent strategy to protect our interests and we are confident we will be able to do so,” the PM said, listing the financial crisis even above terrorism in the list of urgent things his government will have to tackle.
India’s relative insulation from the crisis is due to our cautious approach towards liberalisation, said Singh.
He said the same cautious approach would continue in pending reforms. Incidentally, liberalisation of financial and banking sectors are talked about as the next major steps in reforms in the country.
“We have no ideological positions. We have been cautious reformers. We don’t have a strong ideological commitment to the markets, markets are useful servants, but markets also need regulations, purposeful regulations. So right from the beginning, when we opened up our financial markets in 1993, we did go step by step. We still don’t have a full blown capital convertibility, so whatever we have done has been done with the long term interest of the country in mind and at the same time we have sought to ensure that the risks in the process of opening up are controlled. That will be our broad approach,” the Prime Minister said.
