Indian economy will attract more global investments benefiting from the US slowdown but the country should not get "psyched" by the bubble burst there, Commerce and Industry Minister Kamal Nath said on Wednesday.
However, on the cautious side a study has been initiated in his Ministry to assess the impact of US slowdown on the Indian economy. "It will take a fortnight to do an assessment of what it means to India," he told PTI.
Earlier, the US was the most attractive investment destination for funds from the Middle East and Russia. "All this is changing... India is becoming an important parking lot for investments," Nath said, adding gloomier the US outlook, better it was for India from an investment point of view.
"We must ensure we do not get psyched into the sentimentality of the US downturn. It should not psyche India into pessimism or into an economic impact here," Nath said.
He said the fundamentals of the Indian economy remained strong "but a fine calibration is required to ensure that the momentum continues despite the gloomy economic outlook globally".
Nath said the country's GDP would grow by more than nine per cent in 2007-08 when asked whether he shared the optimism of Finance Minister P Chidambaram. "I agree with the Finance Minister. It (GDP growth) could be higher than nine per cent," he said.
But Nath agreed that the country needs to manage the dangers of overflow of overseas funds, which through impact on rupee, have been affecting the country's exports.
Nath said though the global economy had an impact on exports, the government has not revised the target of 160 billion dollars for the current fiscal. "It is looking, may be, tough to achieve the target. But I am not revising the target. For the time being, I am sticking to it," he said.
Nath said even if targets were not met, exports would still grow by 20 per cent over last year. "If we had not reached it (target), no heavens would fall. The fact is we are still ahead, let's face the fact," he said.
With less than 20 per cent share of the Gross Domestic Product, the one trillion dollar Indian economy is pre-dominantly driven by the domestic consumption, which in turn is getting a boost from over eight per cent rise in per capita income.
While putting up a brave face and stating that the US economic troubles would not creep into the Indian economic outlook, he agreed that the country was engaged with the world's largest economy, which faces more threats in the weeks to come.
"India is not coupled with the US economy. It is not dependent but engaged with the US economy," he said adding that trade destination has also been changing from the west to the east. Nath said the US, which had become the high priest of the best business practices, could face more troubles in the near future.
"The US has been telling the world about best banking practices; they have the worst banking crisis. They have been telling the world even about corporate social responsibility; they have more CEOs in trouble and being prosecuted than any other country," he said. Nath described the Indian banking system to be far more solid in terms of different prudential parameters.
The Commerce Minister, who has often reminded the World Trade Organisation about the changing paradigm in global economic architecture, said he foresaw further collapse of the US credit system. "I am foreseeing a further collapse in credit cards, car loans, student loans in the US in the next couple of months. All the bubbles have not burst as yet, more bubbles are there to burst. There are signs that there is likelihood of even more corrections being required in US economy," he said.
Asked about the prospects of an agreement on the modalities for tariff reduction under the Doha Round within this year, Nath said content was more important than a deadline. "It is not just the timelines... headlines, timelines, bottomlines are there. You just cannot look at the timelines, one has to start looking at the bottomlines and headlines also," he said.
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