Pranab plays down Dubai crisis, says nothing to worry

Asserting that there is no need to press the panic button, Finance Minister Pranab Mukherjee today said the Dubai debt crisis will not have "earth shaking" impact on the country's economy.

"The full impact of the Dubai debt crisis is yet to be assessed, but there is no need to press the panic button," Mukherjee told reporters on the sidelines of a function here.

To draw his point, he pointed out that "first of all, the amount is small and secondly, the exposure of our banking systems to the Dubai financial systems is limited".

He, however, said that "some adverse effect" will be there initially on the stock markets, as was felt yesterday.

The finance minister has also opined that the crisis will not have much impact on the country's exports to the region.

Mukherjee, however, said that the debacle will impact the repatriation of foreign exchange from there and joblessness in the Gulf city-state.

On the issue of the large number of Indians working in that city, he said, "It will have to be seen how this will affect Indians working in Dubai." He, however, sounded confident saying "I don't think it will have much effect on Indian workers in that country."

The Indians constitute as high as 42.3 per cent of the population of Dubai, he added.

"I don't visualise that the Dubai debt crisis will have earth shaking impact," he stressed.

The minster said the situation after the Dubai debt crisis is "manageable" and added that the government would keep a watch on the situation.

On the issue of climate change, he said, "There should be a common and differential approach towards climate change depending on each country."

Earlier delivering the Haksar Memorial Lecture on "Asian economy after the financial crisis--an overview", he said it may be too early to speak about Asia after the crisis, though greenshoots of growth have certainly started to appear. "It is difficult to definitively say that the crisis is firmly and surely behind us," Mukherjee added.

With the growth decelerating from 5.1 per cent in 2007 to 3.1 per cent in 2008, the world economic output got severely affected by the outbreak of the global financial crisis, he said.

Central Asia appears to be the most affected and is expected to see a growth of only 0.5 per cent in 2009 and recover slightly to 3.6 per cent in 2010, Mukherjee said adding that Southeast Asia is also expected to grow at 0.1 per cent in 2009 and at 4.3 per cent in 2010.

"Even, among the developing countries of Asia, in terms of growth impact of the crisis, South Asian economies appear to have been the most resilient so far," he said.