Conservatism helped India blunt impact of crisis, says Mulford
The US feels that a conservative approach towards management of financial markets and capital inflows has helped India in avoiding a bigger impact of the global financial meltdown.
“I think the reason India avoided some of the negative fallouts of the global crisis is the more conservative approach they have towards management of financial markets and financial regulation of those markets and to capital flows and capital movements,” outgoing US Ambassador David Mulford said here.
At the same time, he said, the financial crisis has triggered more interest in India to open up its economy further to attract foreign direct investment. “I think this is very positive,” Mulford said. Noting that Foreign Direct Investment (FDI) has been a very important contributor to India's economy, he said, “India has been liberalising different rules, giving more freedom to investors.”
He said it is all “positive”. A votary of economic reforms, Mulford had been pitching for continuation of financial market reforms and liberalisation.
Speaking at the Confederation of Indian Industry (CII) meeting last month, Mulford had said, “India's steps to facilitate credit and investment flows into the country not only blunted the negative global financial impact but has also positioned India to regain its impressive 9 per cent growth trajectory once global conditions improve.”
According to government officials, the FDI inflows during 2008-09 are expected to exceed the $25-billion level recorded during the previous fiscal.
The increase in FDI inflows comes at a time when the world is facing acute crisis following the financial meltdown, which has already pushed several rich countries like the US and Japan into recession.
India, however, has managed to contain the contagion through a set of fiscal policy and monetary initiatives announced by the government and the Reserve Bank of India.
The country, according to advance estimates of national income for 2008-09, is likely to record a GDP growth rate of 7.1 per cent.
Although the economy will see moderation from a high of 9 per cent recorded in 2007-08, it is being considered as good, given the fallout of the global financial meltdown on the world, including India.
The worrying factor for India, however, is export growth rate, which has moved into negative territory since October 2008, mainly on account of slowdown in demand in major export destinations like the US and the Eurozone nations.