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.
To draw his point, he pointed out: “First of all, the amount is small and secondly, the exposure of our banking systems to the Dubai financial systems is limited.” He, however, added “some adverse effect” will be there on the stock markets initially, as was felt on Friday.
The finance minister has also said the crisis will not have much impact on the country’s exports to the region.
Mukherjee, however, added 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,” though he sounded confident when saying it will not have much effect on the Indian workers . Indians constitute as high as 42.3 per cent of the population of Dubai.
The minister 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’, he said it may be too early to speak about Asia after the crisis, though green-shoots of growth have certainly started to appear. “It is difficult to definitively say that the crisis is firmly and surely behind us.”
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.
Developing Asia’s growth, which had decelerated from 9.5 per cent in 2007 to 6.1 per cent in 2008, is expected to decline further to 3.4 per cent in 2009, he added.