India hopes European crisis does not spread

New Delhi, July 19 (IANS) Confident of at least an 8.5 percent growth for this fiscal, Finance Minister Pranab Mukherjee Monday expressed India’s anxiety over the european financial crisis and its impact on the domestic economy.

‘If Euro zone crisis is restricted to few countries, then it will not have much of an impact on us. But if it spreads to other countries then I don’t know what may happen,’ said Mukherjee, addressing a seminar here.

The finance minister was apparently reacting to reports of talks between Hungary and the International Monetary Fund (IMF) and the European Union breaking down after the Hungarian government declined to implement austerity measures aimed at meeting this year’s budget deficits.

The European Commission had over the weekend postponed conclusion of a review of assistance to Hungary.

The financial crisis first hit Greece and has threatened to engulf other countries. This week sees the publication of European bank ‘stress tests’.

Also, a recent string of disappointing reports on manufacturing and consumption in both Europe and the United States have renewed fears of a significant slowdown.

Mukherjee said multilateral institutions such as the IMF had predicted a 9.5 percent growth for India this fiscal, thanks to the robust financial system, especially the banking industry and private investments.

‘Though IMF has recently upgraded its forecast of gross domestic product for the year 2010-11 to 9.5 percent, I am a bit conservative and am confident that the growth in the current year should be 8.5 percent and our target will be to cross the double digit barrier by 2011-12,’ said Mukherjee.

The finance minister was addressing a conference on financial inclusion organised here by the Confederation of Indian Industry.

He said the government was planning to step up the financial inclusion programmes, including providing appropriate banking facilities to habitations having population in excess of 2,000 by March 2012.

He urged private sector banks to build financial inclusion plans in their respective business strategies.

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