Mumbai: Indian banks not buying toxic
mortgage-backed securities, a good show on the services export
front, robust remittances from abroad and the fact that the
GDP does not come from the external sector, has helped India
cope well with the global economic crisis, Union Minister of
State for External Affairs Shashi Tharoor said on Tuesday.
When most countries suffered negative growth rates in
at least one quarter in the last two years, India's GDP grew
around 6 per cent in every quarter, he said at a function.
Many reasons were attributed for this but first "our
(India's) banks and financial institutions were not tempted to
buy the toxic mortgage-supported securities and engage in the
fancy derivatives and credit-default swaps that ruined several
Western financial institutions," Tharoor said here.
That the country's service exports continued to do
well also helped, though its merchandise exports declined
about 30 per cent, the former UN diplomat said.
"Remittances from overseas Indian community remained
robust reaching USD 46.4 billion in 2008-09, the bulk of which
came from hard-working, blue-collar Indian expatriate
community in the Gulf," Tharoor said.
And finally, some 80 per cent of the GDP does not come
from the external sector but from Indians producing goods and
services for other Indians in India, the Minister said.
Besides these developments, the country's financial
authorities have pursued policies providing for lower interest
rates, expanded credit and lower excise duties, "all of which
have served to boost economic activity," Tharoor said.
When the financial crisis began in September 2008,
foreign investors withdrew USD 12 billion from India's stock
markets. But they have now come back with USD 27.3 billion in
spite of the global financial crisis and FDI reached a peak
rate of USD 1 billion per week in May 2009, he said.
According to forecasts, India could be the world's
fifth-largest economy by 2020, at least in GDP terms, he said.
However, there was still a long way to go, he said,
pointing out that while India has been recognised as a leading
nuclear power, 600 million Indians still have no access to
electricity and there are daily power cuts even in Delhi.
"We are the world's leading manufacturers of generic
medication for illnesses such as AIDS, but we have 3 million
of our own citizens without access to AIDS medication, another
2 million with TB and tens of millions with no health centre
or clinic within 10-kilometres of their places of residence."
Similarly, while India has trained world-class
scientists and engineers, nearly 400 million are still
illiterate, Tharoor said.
The Minister highlighted the problem of unemployment
and said "we just have a lot more to do before it can be
anything like paradise for the vast majority of our fellow
citizens".
PTI