Indian Prime Minister Manmohan Singh urged European leaders to take “resolute action” to tackle the financial crisis in the eurozone as he departed yesterday to attend the G20 summit in Mexico.
Singh described the situation in Europe as one of “particular concern” to India, where the economy grew just 5.3% in the January-March period, its slowest quarterly expansion in nine years.
“Continuing problems there (Europe) will further dampen global markets and adversely impact our own economic growth,” he said.
“It is our hope that European leaders will take resolute action to resolve the financial problems facing them,” he added.
India’s once-booming economy has been hurt by a lack of economic reforms, high interest rates, and plummeting business confidence.
Both Singh and Finance Minister Pranab Mukherjee have blamed the eurozone debt crisis for straining India’s economy, saying that the global slowdown has left them with less room for manoeuvre.
Singh’s government is also under pressure to rein in subsidies and other spending after the budget deficit widened to 5.75% of gross domestic product in the fiscal year ended March 31.
Earlier in the week, Standard & Poor’s warned India could be the first of the Bric emerging economies to lose its investment-grade rating unless the Asian giant revives its growth and spurs reforms.
In April, the firm changed India’s credit outlook to negative from stable, maintaining India’s rating at “BBB-” but warning it faced at least a one-in-three chance of losing its status if its public finances worsened.
“BBB-” is just one notch above “junk”, which carries an increased risk of default and would see India having to pay higher interest rates on its public borrowing.
However, a top official said the S&P warning “neither impacts on its standing in Brics, nor undermines its clout on the global high table”.
The official said India’s influence can also be gauged by the talks US President Barack Obama held with Prime Minister Singh on Friday to discuss the European crisis, environment issues and bilateral matters.
“Standard and Poor’s does not determine what we at Brics think about each other,” the official said, as Singh headed for the G20 Summit, where he is scheduled to also hold talks with Brics leaders.
“They (S&P) have their own prism (of gauging an economy). But we remain a robust and a growing economy. That cannot be taken away,” the official added.
His comments came as Premier Singh was set to meet Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Chinese Premier Wen Jiabao and South African President Jacob Zuma in the Mexican resort town of Los Cabos.
In his statement before leaving New Delhi for the G20 Summit, the prime minister had recalled the Brics Summit in New Delhi in March and how the leaders had agreed to work collectively for the global good.
“Brics countries have been the new growth poles of the global economy,” he had said, adding that as the chair of the forum, he will host an informal Brics meeting at Los Cabos.
Singh, on an eight-day overseas visit, is set to attend two back-to-back meetings over the next few days — the G20 Summit on economy at Los Cabos and the Rio+20 Summit on environment at Rio de Janerio.
Significantly, during the background briefing by the senior official, the import of Obama’s talks over phone with the Indian prime minister was sought to be highlighted against the backdrop of the two summits.
“The two leaders exchanged views on a number of issues like the eurozone crisis, how the global economy can be revived, how growth can be ensured and other bilateral matters,” the official said.
“There was concern that the traditional drivers of the global economy are performing well,” the official said even as emerging economies such as China and India were also experiencing a slowdown.from gulf times.