In view of its economic integration with the world economy, India cannot remain immune to the present global financial crisis, Reliance Capital Chairman Anil Ambani has said.
MUMBAI: In view of its economic integration with the world economy, India cannot remain immune to the present global financial crisis, Reliance Capital Chairman Anil Ambani has said.
"Given its economic integration with the world economy, India cannot remain immune to the global financial crisis. The Indian equities and currency markets have already been affected by these developments," Ambani told shareholders at the company's AGM here on Tuesday.
However, the impact on the overall Indian economy is likely to be far more moderate, thanks to the calibrated, cautious and conservative approach of the country's policy planners, he said.
Referring to the collapse of Lehman Brothers and distress sale of Merrill Lynch, Ambani said, "The single biggest risk facing the global markets is the multi-dimensional credit crisis in the US, which has already caused major financial casualties, and severely impacted leading high-street names from the investment and banking fraternity. This has affected consumer spending and dampened confidence all around."
The current micro economic climate has been characterised by rising domestic inflation, a weakening Re, hardening interest rates, extreme volatility in capital markets and moderate to severe slowdown in leading global economies, Ambani said.
Fortunately, the substantial driver of India's growth is still domestic consumption and investment, isolating it further from the fall-out of the global turmoil, Ambani added.
The GDP growth rate of 8 per cent is a rarity in the current global environment, he said.
It is noteworthy that India continues to be amongst the fastest-growing, trillion dollar-plus economies in the world.
"With a domestic saving rate in the range of 30-35 per cent, among the highest in the world, and over 70 per cent of the population below the age of 35, the strong foundation of India's economy remains intact, and will continue to power our future growth," Ambani said.
Commenting on the interest rate scenario, Ambani said the rates were at a peak. "There is only one way we can see -- (its movement) downwards. The question is the pace of fall and the timing of the fall."
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