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India gauging 'frenzy effect' of Lehman collapse

Source: PTI
September 16, 2008 20:07 IST
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India is assessing the full impact of Lehman Brothers' collapse on the economy, but admitted that the United States crisis could make achieving annual export and fopreign direct investment targets a daunting task.

"Certain crisis does create a frenzy effect and its impact will be assessed in the next couple of weeks," Commerce and Industry Minister Kamal Nath told reporters on the sidelines of a meeting with the Export Promotion Council for EoUs and SEZs in New Delhi.

He said the US slowdown would affect the global economy. India was expecting $40 billion of foreign direct investments in 2008-09, but the sentiment could be affected because of the turmoil in the US economy following one of its largest banks going bankrupt.

Being its third largest trading partner, India's exports to the US were $18.85 billion in calendar 2007. While the country's total exports were close to $160 billion in 2007-08, it has set a target of $200 billion for the current fiscal.

"I still hope to achieve the targets for exports," he said.

Earlier in the day, Nath took a pot shot at the US financial sector stating those 'preaching' others have not kept their own house in order. "Those who preached us best practices have not helped their own financial sector."

Nath said the amount of exposure of the banks going down under is small in Asia. "A very small fraction of that (US economic turmoil) is in Asia. This shows that best practices have been adhered in Asia," he said.

The US credit crisis worsened yesterday with 158-year-old Lehman Brothers filing for bankruptcy protection. Earlier, troubled Merrill Lynch was bought by Bank of America.

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