Dubai debt crisis will not affect India: Zoellick

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Robert Zoellick
Robert Zoellick

Ashok Dasgupta

‘But it may prompt a second or a third look at investments in emerging markets’

NEW DELHI: World Bank president Robert Zoellick on Saturday maintained that the Dubai debt crisis was manageable and that Indian markets would not be affected by the financial problem.

Interacting with the media after his meeting with the country’s policy-makers — Reserve Bank of India Governor D. Subbarao and Planning Commission Deputy Chairman Montek Singh Ahluwalia, among others — Mr. Zoellick said: “I personally think that the Dubai financial problem would be contained and is manageable. I don’t think it to have an effect on Indian markets.”

Alongside, however, he pointed out that although India would remain unaffected, the unfolding of the Dubai crisis “may prompt a second or a third look at investments in emerging markets” owing to the nervousness in financial markets.

As for his perception on how India was emerging out of the global financial crisis, Mr. Zoellick said: “I got a general sense that they [policy-makers] feel that the fiscal expansion [stimulus measures] has played an important role…And over time, as they [sectors of the economy] return to growth, they [policy-makers] are also going to try to get some fiscal consolidation.”

Reiterating the feedback of his four-day country visit, Mr. Zoellick stressed that he was “emboldened” by the economic recovery and India’s growing stature, which was helping global stability. “I have been encouraged by how India has come back quickly in this crisis ...I think that it can play an important role, not only for the people of India but in the international economy,” he said.

Prioritising the interests of India’s policy-makers at the meeting — which was also attended by Secretary of the Department of Industrial Policy and Promotion, Ajay Shankar, and India’s Executive Director to the World Bank Pulok Chatterjee — Mr. Zoellick said: “I think what I get as the principal interest of Indian policy-makers is for longer term investment, not portfolio investment, so much as foreign direct investment.”

He added that he was impressed by the increase in FDI inflows as such investments would help India connect to the international economy. “…The FDI numbers have gone up and that’s a good sign,” Mr. Zoellick said.



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