Conservatism helped India blunt impact of crisis: Mulford

Ajay Kaul

New Delhi, Feb 26 (PTI) The US feels that a conservative
approach towards management of financial markets and capital
inflows has helped India in avoiding bigger impact of the
global financial meltdown.

"I think the reason India avoided some of the negative
fallouts of global crisis is the more conservative approach
they have towards management of financial markets and
financial regulation of those markets and to capital flows and
capital movements," outgoing US Ambassador David Mulford told
PTI here.

At the same time, he said the financial crisis has
triggered more interest in India to open up its economy
further to attract foreign direct investment.

"I think this is very very positive," Mulford said.

Noting that FDI has been a very important contributor to
India's economy, he said, "India has been liberalising
different rules, giving more freedom to investors."

He said it all is "positive".

A votary of economic reforms, Mulford had been pitching
for continuation of financial market reforms and
liberalisation.

Speaking at CII meeting last month, Mulford had said,
"India's steps to facilitate credit and investment flows into
the country not only blunted the negative global financial
impact but has also positioned India to regain its impressive
9 per cent growth trajectory once global conditions improve."

According to government officials, the FDI inflows during
2008-09 are expected to exceed USD 25-billion level recorded
during the previous fiscal.

The increase in FDI inflows comes at a time when the
world is facing acute crisis following the financial meltdown,
which has already pushed several rich countries like the US
and Japan into recession.

India, however, has managed to contain the contagion
through a set of policy fiscal and monetary initiatives
announced by the government and the Reserve Bank.

The country, according to advance estimates of national
income for 2008-09, is likely to record a GDP growth rate of
7.1 per cent.

Although the economy will see moderation from a high
of 9 per cent recorded in 2007-08, it is being considered as
good given the fallout of the global financial meltdown on the
world, including India.

The worrying factor for India, however, is export growth
rate, which has moved into negative territory since October
2008, mainly on account of slowdown in demand in major export
destinations like the US and the Eurozone nations. PTI AKK
PMR