December 03, 2008

Global slowdown hitting investments in India – FM

Mr P Chidambaram union finance minister last week said that global slowdown is affecting investment in India as investors were deferring their plans in the country.

Stating that there were clear signs of a slowdown in the world economy, Mr Chidambaram said that the pessimism is affecting the decisions of global investors, who are adopting the policy of wait and watch.

He added that "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. There is a growing feeling among international experts that the US economy faces serious recessionary pressures."

He said developing countries, including India, were helpless victims of global uncertainty. Referring to the impact of the US slowdown, he said turbulence in the financial markets had added to the difficulties of sustaining high growth in India. He added that "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."

Mr Chidambaram further added that many banks in Germany and the UK had to be bailed out after the sub prime mortgage crisis hit the US, though Indian banks had so far remained largely unaffected.