By IANS
New Delhi : The possibility of recession in some rich nations and the financial crisis in the global capital markets due to sub-prime lending may impact India’s exports and funds inflows, Prime Minister Manmohan Singh warned Wednesday.
“There are some clouds on global financial markets after the sub-prime lending crisis,” the prime minister told the 54th meeting of the National Development Council (NDC) here to approve the Rs.36.44 trillion 11th Five-Year Plan.
“There are worries that growth of the US and other leading economies may slow down and some may even go into a recession. This may impact both our exports as well as capital flows,” he said.
“Our economy is now increasingly integrated into the global economy with the external sector now accounting for almost 40 percent of gross domestic product and hence, we cannot be fully immune to international developments.”
At the same time, the prime minister said the possibility of accelerating growth to over 10 percent was a distinct possibility with the right policies, as also because of rising savings and interest rates and the economy’s resilience.
“This is not to say one must be pessimistic and must be less ambitious in our growth targets. It only implies we need to redouble our efforts to maintain the domestic drivers of growth and ensure policy facilitates even faster growth.”
Manmohan Singh also laid emphasis on inclusive growth and the removal of inter-regional and urban-rural disparity since expansion the economy and wealth cannot be the goal and objective of all planning processes.
“Growth is certainly a good indicator that lives of our citizens are improving. It also expands the resources available to us for investing in human, physical capital,” he said.
“However, we need to reconcile growth concerns with a large number of other concerns that influence the well being of our nation and our people.”
The 54th NDC meeting comes in the backdrop of the Indian economy registering a growth of over 7.5 percent during the 10th plan and with the target of scaling it up to over nine percent in the ensuing five years.
“Towards Faster and More Inclusive Growth” is the central theme of the plan that runs from 2007-08 to 2011-12 and seeks to lower poverty by 10 percentage points, generate 70 million new jobs and reduce unemployment to less than five percent.
After several months of hectic deliberations, the Planning Commission and the Union Cabinet approved the draft Five-Year Plan, and the NDC is expected to give it an operational go-ahead Wednesday.