The Dubai debt crisis is likely to have ‘some impact' on India's exports and imports as the gulf region is the country's largest trade partner, the pre-budget survey indicates. It also signals that remittances could also stand impacted by the crisis.
The financial crisis in Dubai erupted in November last with the conglomerate Dubai World asking creditors for six months to repay $59 billion debt.
The United Arab Emirates (UAE) accounts for about 10 per cent of India's $490 billion trade in 2008-09.
While imports from the region amounted to $23.79 billion, exports were at $24.47 billion, according to official figures. The Gulf accounts for nearly one-third of total remittances into the country and 40 per cent of the population in the region are of Indians. The total money remitted to India in 2008-09 was $46 billion. ``Indian expats comprise a large percentage of the total workforce in Dubai. The crisis may lead to salary cuts or job losses for Indian workers in the construction sector with consequent effect on remittances and NRI deposits.
However, the impact of the crisis on India's realty sector would be modest,” it says.
However, the survey says that after a lull in 2008, Indian equities once again became the favourite bet for foreign funds, which pumped in nearly Rs.88,000 crore in domestic shares in 2009.