India's short-term outlook 'cloudy'; medium-term positive: PM

Anil K Joseph

Tokyo, Oct 22 (PTI) Prime Minister Manmohan Singh
Wednesday said the Indian economy has the resilience to
sustain a growth momentum in the range of nine percent in the
medium-term though the short-term outlook looks "cloudy" due
to the impact of global economic crisis.

"The short-term outlook is cloudy but I am confident that
the Indian economy has the resilience to sustain its growth
momentum in the medium-term," Singh said while addressing an
august gathering of top Indian and Japanese business leaders
here.

Singh, on the second day of this three-day official visit
to Japan, said the "great turbulence in the world economy" has
"chocked credit flows and predictably spilled over to the
stock market.

"We have to prevent the liquidity crisis from becoming a
crisis of confidence in the international monetary and
financial system," he said at the luncheon organized by Nippon
Keidanren, the Japan-India Business Cooperation Committee and
the Japan Chamber of Commerce and Industry.

An eminent economist himself, the 76-year-old Singh said
the global nature of the crisis calls for a coordinated global
response.

"We hope to build on India's many strengths as an
emerging market economy that is now ready for rapid growth.
Over the past four years, we have averaged nine percent G.D.P.
growth per year.

"It will slow down in the current year because of
conditions in the global economy. Once normalcy returns, we
can regain the nine percent trajectory," Singh said
confidently, assuring foreign investors about the stability of
India's economy.

"Developing economies like India are affected by the
crisis and have to be part of the solution," he said,
stressing that the country cannot risk the gains it has made
in the last few years.

"Nor do we want to remain vulnerable to infirmities in
international surveillance, supervision and regulatory
mechanisms in the future," Singh said.

He said India has taken several measures recently to
ensure adequate liquidity and confidence in the economy.

"The fundamentals of our economy have been and continue
to be strong. Our banking system is well capitalised. However,
we have experienced a shrinking of liquidity to ensure that
the rhythm of economic activity is not disrupted," he said.

"The Reserve Bank of India stands ready to respond
swiftly to address the needs of the economy," the Prime
Minister said.

He also pointed out to the guests that India had a
tradition of a high rate of savings (up to three percent)
like most Asian countries and a dynamic private sector.

"As we work to put India on a higher growth path with
greater inclusiveness, India and Japan can cooperate in many
ways," he said.

Describing Japan as the "economic and technological
powerhouse of the world," Singh noted that both nations were
located in Asia to which the 21st century undoubtedly belongs.

"Both of us have the wherewithal to become the magnate of
growth in Asia and globally. India and Japan can cooperate in
the coming period of global slowdown to devise
counter-cyclical strategies to create a new zone of growth in
the world," the Prime Minister said.

The relationship between India and Japan transcended the
economic domain, he said, noting that the two nations
understood the language of democracy.

"We share the common values of freedom, an open society
and a free market economy. We share civilisational links, and
believe in the Asian approach to problem-solving and wealth
creation," he said ahead of his summit-level talks with his
Japanese counterpart Taro Aso.

"We wish to learn from the Japanese style of management
and the premium it places on human qualities and traditions,"
he added.

He also appealed to the foreign investors, including the
Japanese not to worry about the difficulties that they may
face in a new environment.

"A vibrant democracy often presents new challenges. I
urge you to have faith in our system and our resolve. We are
committed to creating a congenial climate for private
initiative, risk-taking and enterprise," Singh added. PTI AKJ
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