Grappling with a sharp drop in rupee value and downgrade in sovereign rating outlook, India, on Friday, blamed structural problems in eurozone and volatile commodity prices for balance of payment (BoP) stress in many Asian countries.
“In several Asian countries, excepting China, the BoP is under stress, which leads to currency depreciation,” Finance Minister Pranab Mukherjee, who is attending the annual meeting of the ADB Board of Governors, told reporters here.
He said certain fundamentals of the Indian economy had to be corrected against the backdrop of the rating agency Standard and Poor's downgrading outlook for the country's sovereign rating.
He, however, did not elaborate what action the government was mulling.
At the business session of the board of governors, he said, “underlying structural problems in eurozone, high and volatile commodity prices, particularly of fuel oil, and threats to disruptions in supply chains have undermined business confidence.''
The main areas of concern for Mr. Mukherjee were eurozone and Japan, as they provided big markets to the merchandise from the developing world.
“Unless recovery in Japan and Europe is fast tracked...it will have its impact. Eurozone crisis is expected to cast its shadow...,” he said.
The Indian currency has suffered sharp losses by over 15 per cent in the last few months, leaving a bruising impact on the country's imports, which mainly comprise crude oil.
