Crisis not to impact economy: Govt
Even as the Dubai debt crisis threatens to exert some adverse impact on the Indian economy the government, on Friday, asserted that country’s economy would not be affected by the latest financial turmoil hitting the global economy.
“Indian economy is strong, sound and large. It would not be affected by debt crisis facing Dubai. Indian economy is resilient enough to stand firm,” the Commerce and Industry Minister Anand Sharma told reporters here.
Brushing aside fears among investors in the wake of the Dubai crisis, he said “an economy of India’s size and dimension can face any financial crisis.” “We do not think some development in real estate in Dubai will have an impact on the Indian economy. As far as India is concerned the housing, real estate sector and construction industry are doing well. This has been confirmed by the increasing demand for construction materials, cement and steel,” Sharma said.
However, it is being apprehended that India’s export to Middle East and African countries may be affected as Dubai is the hub through which country’s export to these regions is routed through. But, Sharma said “I hope the export would not be affected.”
Finance Secretary Ashok Chawla said it was too early to assess the impact of Dubai debt worries on the Indian economy and companies. “We will have to study what the issue is, what the problem is, and what will be the possible implication, if any, for the Indian economy, people and the corporate sector,” he said. To a query he said the financial crisis in Dubai might not impact remittances sent by Indian expatriates in the Gulf.
“Remittances from expatriates did not suffer during the period when the larger crisis was on. So whether this should have an impact in terms of employment, in terms of salaries and therefore in terms of remittances is somewhat unlikely,” he added. India receives nearly a quarter of its total remittances from the United Arab Emirates.
Likewise, Prime Minister Economic Advisory Council said the Dubai crisis would not affect the country’s growth rate, but admitted that remittances from the Gulf city-state may slow down. PMEAC chairman C Rangarajan told PTI here that probably the Middle East countries would come to the rescue of Dubai, which may not plunge the world into another financial meltdown. “This particular incident in Dubai may not necessarily assume the magnitude that will have an impact on our growth rate. But, there could be some slowdown in remittances.
But, Dubai is only one source, there are other sources, from which remittances come which may not be affected,” Rangarajan said.
“I have a feeling that probably the other Middle East countries would come to the rescue of Dubai and prevent it from becoming a major crisis,” Rangarajan said.
