Prime Minister Manmohan Singh has said India?s economy is bound to feel the pain of the global financial crisis ?sooner or later?, as ?we are not in complete control.?
?We are not in complete control. There are bigger players and we are victims of that. The crisis is not of our making,? Singh said after participating in the 7th Asia-Europe MeetingSummit in Beijing.
?It all depends on how long it takes the world community to restore confidence to the global financial markets,? the economist-turned-politician, whose speeches were listened with rapt attention in Beijing, said.
Sooner or later, ?the economy is bound to experience the pain,? Singh warned during an interaction with reporters on board his special aircraft while returning home from his two-nation tour of Japan and China. Singh said despite strong corrective measures like injecting more liquidity and capitalising the banking system, he was still ?worried.?
?The type of integrated world economy we live in we are not immune and I had mentioned in Parliament earlier this week on Monday and I repeated that same sentiment in Beijing (while attending the ASEM summit),? Singh said.
However, the Prime Minister said his government has had ?a reasonably good term? in office till now. ?We have had a reasonably good term and I would not deny that over the last few months inflation had become a problem. Also, recently because of the global factors, the financial crisis is having some effect on our economy. Therefore, we are obliged to take corrective measures,? Singh said.
?To say that I am not worried would not be correct. It is my duty as Prime Minister to worry when things don?t go as planned,? he said. Asked to comment on the view of the Left parties that India has largely escaped the effects of the global financial turmoil due to their policies, the Prime Minister said: ?I am afraid I don?t agree.? ?Strengthening India?s banking system, strengthening India?s insurance system has enabled us to deal with the crisis more effectively,? he said. He said reforms cannot take place in political and economic vacuum and his government was faced with problems. ?The situation has been such that oil prices shot up in a manner that if I had passed on the whole burden to the people at large, there would have been reckless inflation,? Singh said, adding that would have been ?far more counter-productive than our position to pass on only a limited amount of increase to the final consumer.?
Looking at the economy from the traditional point of view, he said ?below the line fiscal deficit has increased, but in a situation in which we are placed now, it is a definite advantage. It is not a disadvantage.?
?I think, we are in a typical Keynesian situation where there is a lack of demand, private sector demand is very weak, but strong government demand, both for social services and for investments will provide the essential stabilisers that our country needs in a time like this. ?We would have liked to do a lot more. But I think politics is the art of possibilities,? he said.