The finance minister also hinted that there could be only a moderate hike in fuel prices as the government could not pass on the full burden of the runaway rise in global crude prices to consumers. (Even) if oil prices touch $100 a barrel, we cannot pass the burden to consumers as it will push them to misery, Chidambaram said at BBC World DebateGlobal Economic Shock: Perfect Storm Ahead.
Attributing the US problems to lack of regulations and failure of the regulator, Chidambaram said the Indian economy was largely driven by domestic factors and was substantially isolated from present global shocks. The drivers of economic growth are investment and economic consumption. (There are) very high savings, demand for credit is very high, projects in the pipeline are moving forwardthere is no slowdown. My view is Indias economy will continue to cruise along at 8-8.5% in 2008, we will continue to grow at a fast rate.
Though Indias exports continue to grow by healthy 22%, many of the labour-intensive sectors like textiles, leather and handicrafts have seen decline in orders. The US is the second largest destination for Indian exports.
Chidambaram had said on Friday while the US economy was likely to see a slowdown, fears of a deep recession were misplaced. The fears about the US going into a deep recession are unfounded, perhaps exaggerated, he said in an interview.
He also said India and China would account for 60% of the world GDP by 2020 regaining their past glory. The share of India and China stood at 60% in world GDP in 1820, and by 2020 it will be again be 60%, the minister said.