No Impact of Dubai crisis on India: Zoellick

No Impact of Dubai crisis on India: Zoellick
Business Standard, December 6, 2009, Page 2

BS Reporter / New Delhi

The World Bank chief meets top policy makers.

The financial crisis in Dubai will not affect India but may prompt investors to take a relook at emerging markets, according to World Bank President Robert Zoellick.

“I do not think it will have an effect on Indian markets,” Zoellick told reporters after a meeting with a select group of policy makers on the final day of his four-day visit to India.

He said though the financial problems in Dubai were manageable, they might prompt a second or a third look at investments in emerging markets due to the nervousness in the financial system.

Zoellick, who met Reserve Bank of India Governor D Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Department of Industrial Policy and Promotion Secretary Ajay Shankar, among others, said the meetings helped him understand how India was coming out of the global financial crisis.

“I got a general sense that they feel the fiscal expansion has played an important role… As they return to growth, they are also going to try to get some fiscal consolidation,” Zoellick said.

He said Indian policy makers preferred longer term investments like foreign direct investment to portfolio investments as the former could help the country connect to the international economy. “One of the interesting observations made at the meeting was that FDI has gone up and that is a good sign.”

This was Zoellick’s second visit to India in the last two years as the head of World Bank. During the visit, he met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee. He also made a day-long trip to Tonk district in Rajasthan where met Chief Minister Ashok Gehlot