New Delhi, July 19 (IANS) Finance Minister Pranab Mukherjee Monday said India will grow at more than 8.5 percent this fiscal but if the European financial crisis spreads it will affect the domestic economy.
Mukherjee emphasised the resilience of the Indian economy and said: ‘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.’
Europe is India’s biggest overseas market and accounts for about a fifth of its exports.
The financial crisis, triggered by a sovereign debt default by Greece, has threatened to engulf other countries, like Portugal and Hungary. Over the weekend, media reports said of a breakdown of talks between Hungary and the International Monetary Fund (IMF) and the European Union on assistance to Hungary.
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 in recovery.
Addressing a seminar here, 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 plus and our target will be to cross the double digit barrier by 2011-12,’ said Mukherjee.
He said financial inclusion is a must to maintain the growth momentum and the government would provide appropriate banking facilities to the unbanked.
He asked private sector banks to build financial inclusion plans in their respective business strategies.