On Friday, Prime Minister Manmohan Singh sought to allay fears of a possible US slowdown affecting Indian economy by saying that the country's economic foundation was strong enough to sustain 9-9.5 per cent growth.
"I am confident we can sustain our growth momentum at 9 and 9.5 per annum despite international situation," Singh said at a joint press conference with visiting French President Nicolas Sarkozy in New Delhi.
Asian stock markets, including Bombay and National Stock Exchanges, went into a tailspin earlier this week on fears of a recession in US economy. The Indian markets, however, bounced back after the US Fed made unprecedented cuts in interest rates on January 22.
"It is an inter-dependent world. International financial crisis can affect economies of developing countries like India," Singh said, hoping that the US will take steps to contain the impact of a sub-prime crisis that had threatened the financial stability the worldover.
"We hope the US will take effective and credible steps to check the sub-prime crisis," he said, but saw little impact of the crisis on India. "We won't be affected much as foundation of Indian economy is sound."
Sarkozy replying to questions on the impact of the record $7.15 billion fraud at France's second biggest bank Societe Generale, said: "The crisis is radiating out of US sub-prime issue so there is need for more transparency and less regulation... The situation can't go like this."
The French President, however, stated that the crisis would not impact his nation's banking system. "We will not be affected. No way it can affect the stability of the French banking system."