India indirectly affected by global cash crisis: Chidambaram

October 20th, 2008 - 8:57 pm ICT by IANS  

New Delhi, Oct 20 (IANS) Indian financial markets would be “indirectly” affected by the global cash crunch, though it would be limited, Finance Minister P. Chidambaram said here Monday.Describing the situation as “one of the most difficult ones in modern history”, Chidambaram said the global crisis will not impact the country directly as India’s financial system had “sound fundamentals” and the country had a transparent, efficient market.

“However, indirectly the cash crunch prevailing in the world will certainly affect our financial markets too, though at a limited scale,” he said, addressing a function to mark 50 years of Indo-German Bilateral Cooperation Development.

Saying it was the “testing time for the world and for globalisation”, the minister urged world leaders to work in “close cooperation” to ensure that the crisis does not worsen “the already abysmal living conditions of the poor people of the world”.

He admitted the Indian economic growth had been affected recently, but mainly due to the high fuel prices that had been in the upward trajectory for the major part of this year.

“Inflation crossed the 12 percent mark, mainly due to our dependence on oil imports and 94 percent of the week-on-week increase in inflation was attributable to petroleum products,” said Chidambaram.

Stating that inflation was like an “iniquitous form of tax”, he said government had taken steps to tackle it.

“In the area of food security, I am happy to state that India is largely self-sufficient in food grain production and is in no way responsible for rise in food prices, as was erroneously projected in some corners,” Chidambaram said, noting that the country had achieved an all time record production of food grains.

Painting a rosy picture, he said despite the global slowdown, Indian economy would grow at an average of over 8 percent.

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