India’s economic woes have not gone out of hand in the wake of the slip in the GDP growth — the lowest in nearly nine years — but there could be trouble if the eurozone crisis is not quickly contained and financial stability in Europe restored, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said on Sunday.
Ahead of the G20 Summit of developed and developing countries being attended by Prime Minister Manmohan Singh among other world leaders, Mr. Ahluwalia said India will be “lucky” if it can achieve around 7 per cent growth rate this fiscal.
The country’s economic growth rate slipped to 5.3 per cent in the fourth quarter of 2011-12, lowest in nearly 9 years due to poor performance of the manufacturing and farm sectors.
Ways to fix the eurozone crisis to prevent a contagion effect that could hurt the economies emerging economies like India and China is on the top of the agenda of the G20 leaders who will be meeting in this Mexican coastal resort over the next two days.
Mr. Ahluwalia said the general assessment at the ongoing deliberations is that the global economy is “extremely weak” and it could sow the seeds for a second financial crisis in four years if the eurozone crisis is not handled effectively.
“We have not reached a situation where there is a sudden outflow of funds. We don’t need any support from IMF. We are not looking for anything like that,” he said.
“We will be lucky to have 61/2 per cent to 7 per cent growth which is lower than the long-term target,” Mr. Ahluwalia, said. The G20 accounts for 80 per cent of the global GDP.
Mr. Ahluwalia said most countries have exhausted their “firepower” in tackling the faltering global economy and there is not that much fiscal room now.
“We are fortunate that we are not in a position that we will be looking at any kind of emergency assistance. We are not posing to G20 any specific thing that can be done for India. We are basically saying that most important thing that G20 can do for India is to put in place a credible assurance for global financial security,” he said.