Global slowdown affecting investments in India: FM
P Chidambaram said the pessimism in the environment was affecting decisions of global investors, who were adopting the policy of 'wait and watch'. Day in Pics
By PTI |
SINGAPORE: India's Finance Minister P Chidambaram on Wednesday said global slowdown was affecting investment as investors were deferring their investment plans in the country.
Stating that there were clear signs of a slowdown in the world economy, Chidambaram said the pessimism in the environment was affecting decisions of global investors, who were adopting the policy of "wait and watch."
"This has obvious negative effects on future growth. Global slowdown, rising inflation and subdued interest in investment make for a combination that can have only negative consequences for developing countries," he said while delivering a lecture here.
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There is a growing feeling among international experts that the US economy faces serious recessionary pressures, he said while attributing lack of adequate regulations in the US sub-prime market for global uncertainty. He said developing countries, including India, are "helpless victims" of global uncertainty.
Referring to the impact of US slowdown, he pointed out that turbulence in the financial markets has added to the difficulties of sustaining high growth in India.
"As the crisis moved from one market to another, and when it entered the credit market, the consequences of the crisis are being felt in India too."
Chidambaram said many banks in Germany and the UK had to be bailed out after sub-prime mortgage crisis hit the US, though Indian banks have so far remained largely unaffected.
To contain the impact of slowdown, he said the government has taken many steps in the Budget to stimulate demand, which included reduction in income tax, expanding and deepening the corporate debt market, and large outlays for social sectors.
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