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Dubai financial problems manageable, says Zoellick

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Stresses on importance of trade, need to resist protectionism.

The World Bank President, Mr Robert B. Zoellick, flanked by the Deputy Chairman ofthe Planning Commission, Mr Montek Singh Ahluwalia, and the RBI Governor, Dr D.Subbarao after a closed-door meeting in the Capital on Saturday. - Kamal Narang
The World Bank President, Mr Robert B. Zoellick, flanked by the Deputy Chairman ofthe Planning Commission, Mr Montek Singh Ahluwalia, and the RBI Governor, Dr D.Subbarao after a closed-door meeting in the Capital on Saturday. - Kamal Narang

Our Bureau

New Delhi, Dec. 5

India need not entertain any worry about the recent debt crisis of Dubai World adversely impacting its market, the World Bank President, Mr Robert B Zoellick, said here today.

“I personally think that the Dubai financial problems will be contained and manageable. I don't think it will have an effect on the Indian market,” Mr Zoellick told reporters after a meeting with key Indian policy makers including the RBI Governor, Dr D. Subbarao, and the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia.

Late last month, Dubai World, the State-owned conglomerate that spearheaded Dubai's growth, had asked creditors of its flagship property firms — Nakheel and Limitless — for a six month repayment freeze on some of its debt. This had shaken global markets and raised apprehensions here that the debt crisis may spillover to India.

“I think because of the nervousness in financial markets, the events in Dubai caused everybody to take a second or third look at fragilities,” Mr Zoellick noted.

On his meeting with top Indian policy makers this morning, Mr Zoellick said that they discussed critical issues of infrastructure, budgetary issues, and the changes in business models that one sees coming out of the Indian economy.

The World Bank Group President said that he was encouraged by India's rebound in the current global economic downturn. Mr Zoellick said that he stressed the importance of trade and the need to resist protectionism.

“We also talked about the challenges of low-income States, about the G-20 process and how India can play a role with some of the global economic challenges of the day,” he said.

Asked whether he got a sense of the timing of exit (on stimulus measures) from Indian policy makers, Mr Zoellick said, “I got a general sense that they feel fiscal expansion has played an important role and over time as they return to growth they are going to get fiscal consolidation.”

The meeting observed that Foreign Direct Investment into India had gone up this year, which Mr Zoellick pointed out was a “good sign”.

“I get that the principal interest of policymakers (in India) is to get longer term investments not portfolio investments so much as foreign direct investments that can help them connect to international economy”, he said.

He said that the main purpose of his visiting India was to listen and learn about how the country was coming out of the global financial crisis and also its growth strategies for future.

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Dubai: From growth to crisis

(This article was published in the Business Line print edition dated December 6, 2009)
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