Euro crisis hurting growth, exports: FM

Finance Minister Pranab Mukherjee on Monday said the eurozone crisis has impacted India’s short-term growth prospects and it might hurt the prospect of exports.

“The recent developments in eurozone countries have heightened uncertainty in financial markets throughout the world. As a result, India’s short-term growth prospects have also been impacted,” he said said while inaugurating the India International Trade Fair.

The minister said ever since the global financial crisis began, the world has seen most major economies facing an uphill task in engineering their recovery. Each one is variedly affected by concerns ranging from high unemployment to declining incomes to inflation and to issues related to sovereign debt, he said.

India, however, would come out of the crisis without any major economic dislocation and its growth momentum would recover rapidly, he added.

Mukherjee said the tendency of certain developed countries to adopt protectionist measures during a downturn would have a bearing on India’s exports, which have shown good growth so far. “If the eurozone crisis prolongs, then the growth in exports will be impacted,” he added.

As per recent export data, the growth of merchandise exports during first six months of 2011-12 is 52 per cent. Industrial production slipped to a two-year low of 1.9 per cent in September. GDP growth in the first quarter of the fiscal stood at 7.7 per cent, the lowest rate experienced in 18 months.

Mukherjee said the experience from the past couple of decades indicated that the globalised world of present times offered incredible opportunities, but that they also posed enormous challenges. If the years before the global financial crisis in 2008 presented the prosperity that came with globalisation, the distressing economic dislocation in the aftermath of the crisis, in several countries, have demonstrated its lasting costs, he noted.

The minister said the performance of India’s economy over the last two decades is a testimony to the success of the policy measures initiated since the economic reforms of early 1990s. The Indian manufacturing sector has come of age, and is making its presence felt globally in sectors like the automobile and auto components, pharmaceuticals, textiles and steel, he added.