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Euro crisis hurting India, says Pranab
Finance Minister Pranab Mukherjee on Monday said the Euro Zone crisis is impacting the country's growth and will hurt exports in coming months.
"The recent development in the euro zone has heightened uncertainty in financial markets. India's short-term growth prospects have been adversely impacted," he said while inaugurating the India International Trade Fair in New Delhi.
The minister further said the tendency of certain developed countries to adopt protectionist measures during a downturn would have a bearing on India's exports, which have reported impressive growth so far this year.
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Euro crisis hurting India, says Pranab
"India's export sector has performed well this year. I must add that the tendency of some developed countries to resort to protectionist measures in the face of downturn of their economy is a matter of grave concern, not only to our exports, but also to the recovery of the world as a whole," he said.
"If the Euro Zone crisis prolongs, growth in exports will be impacted," he added.
Industrial production slipped to a two-year low of 1.9 per cent in September. Overall economic growth in the first quarter of the fiscal stood at 7.7 per cent, the lowest rate experienced in 18 months.
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Euro crisis hurting India, says Pranab
The Reserve Bank of India has already revised its growth projection for 2011-12 downward to 7.6 per cent from 8.5 per cent in the previous fiscal, mainly on account of the global economic slowdown and stubborn domestic inflation.
Headline inflation remained near the double-digit mark for the 11th consecutive month in October, registering a rate of 9.73 per cent.
With regard to exports, India recorded an increase of 46 per cent in outbound shipments during the April-October period of FY'12.
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Euro crisis hurting India, says Pranab
However, a substantial deceleration was witnessed in October, with the growth rate slipping to 10.8 per cent.
The Euro Zone has been facing sovereign debt problems that could snowball into a major financial crisis.
The 27-nation European Union is India's largest trade partner and export market and problems there would have a direct bearing on the country's shipments.