New Delhi - India may escape the worst consequences of the global financial crisis due to strong internal growth drivers, but money, debt and credit markets could be impacted directly, the country's central bank chief said Sunday. "The equity and the forex markets provide the channels through which the global crisis can spread to the Indian system," Duvvuri Subbarao, Governor of the Reserve Bank of India, said in a statement on the bank's website.
Risk aversion and frozen money markets have not only raised the cost of funds for Indian corporates, but also affected its availability in international markets, Subbarao said.
"Reduced investor interest in emerging economies could impact capital flows significantly. The impending recession will also impact Indian exports," he said in remarks made at an International Monetary Fund meeting in Washington.
India has been one of the best performers in the world economy in recent years in recent years, growing 9.2 per cent in 2007 and 9.6 per cent in 2006.
The Indian Finance Minister P Chidambaram has meanwhile asked the IMF to take the lead in resolving the financial meltdown, saying a delay in addressing liquidity concerns could cause solvency problems.
"If not addressed with speed and determination, the prolonged liquidity concerns could turn into solvency problems, further jeopardising the stability of the global financial system," Chidambaram said in a statement.
