India hit by ripple effects of global financial crisis: FM

Confident of achieving 7-8 per cent economic growth
Banks have little exposure to sub-prime lending
Sound fundamentals of country’s financial system

NEW DELHI: Finance Minister P. Chidambaram on Monday maintained that India was only experiencing the ripple effects of the global financial crisis without any direct impact on its economy which would succeed in growing by close to eight per cent during the current fiscal.
Speaking at a function to mark the completion of 50 years of Indo-German bilateral development cooperation here, he pointed out that even the most pessimistic estimates have projected a growth rate of not less than seven per cent. “But I am confident that the economy will grow between seven and eight per cent,” he said.
Elaborating as to why he hoped that the Indian economy would grow at an average of over eight per cent despite the global slowdown, Mr. Chidambaram said: “The global financial crisis will not directly affect India as Indian financial system has sound fundamentals and the Indian Government has put in place, systems and practices to promote a safe, transparent and efficient market to protect market integrity. Most of the Indian banks have negligible exposure to sub-prime lending.”
The Finance Minister, however, conceded that the cash crunch prevailing in the world would certainly affect the country’s financial markets indirectly, though at a limited scale.
“Credit crunch that the world faces has also impacted us. We have taken a series of measures to infuse greater liquidity and to restart the process of credit…We are moving at a calibrated pace. Our banking system is very strong and our banks are well capitalised and well regulated,” he said.
Echoing similar sentiment at a function organised by Controller General of Accounts (CGA) here, Minister of State for Finance Pawan Kumar Bansal noted that owing to the strong fundamentals of the Indian economy, the Government would be able to ward off the adverse impact of the global slowdown through swift actions. “The government will remain vigilant and take a quick action wherever required,” he said.
Mr. Bansal pointed out that one of the biggest challenges in the medium-to-long term would be to effectively sustain the high growth rate witnessed in recent years.
This, he said, would necessitate development of diverse, regionally balanced, physical and social infrastructure for which there was a need to find ways and means to mobilise resources and complete infrastructure projects without any cost or time overruns.