India's Exports are Likely to Improve

Sovereign Debt Crisis and Woes of Some EU Nations are a Matter of Concern

Effort to keep Value of Currencies Artificially Low Could Have Adverse Impact on Competitiveness of Indian Companies

Protectionist Measures Could Have Serious Implications for the World Economy as a Whole

The first meeting of the Financial Stability Development Council (FSDC) was held under the Chairmanship of Union Finance Minister Shri Pranab Mukherjee, here today.

The issues discussed in the meeting include, functioning of FSDC, State of the Indian economy, economic recovery in the West and implications for India and exchange rate. It was decided that necessary guidelines would be issued for the functioning of FSDC.

On the state of the Indian economy, the general consensus was that the nation would be able to sustain its present level of growth and prospects are bright for attaining double digit figures. The challenges to continue on this trajectory of growth would include reducing the fiscal and current account deficit and fast tracking India's infrastructure projects.

The meeting assessed the signs of economic recovery in the West and came to the conclusion that 2011 could see improvement in the world economy. US could see better growth in 2011. EU could also see positive growth though the sovereign debt crisis and woes of some nations are a matter of concern. In the light of the projected economic recovery, India's exports are likely to improve.

It was felt that Currency issues, as is being played out, could have implications for India. The effort to keep the value of currencies artificially low could have adverse impact on the competitiveness of Indian companies both within and outside the country. If nations adopt protectionist measures, it could have serious implications for the world economy as a whole.

The meeting was attended by Dr. Subba Rao, Governor, RBI, Shri Ashok Chawla, Finance Secretary, Shri R. Gopalan, Secretary, Department of Financial Services, Shri Rajiv Aggarwal, Secretary, Ministry of Consumer Affairs, Dr. Kaushik Basu, Chief Economic Advisor, Shri C.B. Bhave, Chairman, SEBI, Shri J. Hari Narayan, Chairman, IRDA, Shri Yogesh Agarwal, Chairman, PFRDA, Shri B. Khatua, Chairman, Forward Markets Commission, Shri Bimal Julka, DG (DoC) and Dr. Thomas Mathew, JS (CM).

Currency undervaluation risks could undermine competitiveness and global trade, urging fiscal consolidation and infrastructure acceleration. The Financial Stability and Development Council will issue functioning guidelines and focused on sustaining India's growth by reducing the fiscal and current account deficit and fast tracking infrastructure; it noted likely export improvement with global recovery but warned that sovereign debt tensions, currency undervaluation and protectionist measures could undermine competitiveness and global trade.