FM fears protectionsim by US, slow down of global economy

New Delhi, Jan 19 (UNI) Finance Minister P Chidambaram today sent out a note of pessimism on the prospects of the global economy, citing the perceived protectionist approach in the US Congress and the fact of attempts to put restrictions on high energy consumption by the rapidly and large economies of India and China.

''The protectionist approach of the Democrats in the US Congress and restrictions on energy consumption of developing countries like India and China will impact and impair prospects of the global economy,'' Mr Chidambaram said addressing a seminar here.

The event, which had its theme, 'Prospects for the World Economy' after the Recent US Election, was organised jointly by the Confederation of Indian Industry (CII) and the Columbia Business School, here.

The Finance Minister was also concerned that the results of the US Congress will make thwart the process of restarting the Doha Development round.

''As most Democrats have won on a protectionist agenda, they may not support taking forward the Doha round of talks. Hope the new Congress will not impair the capacity of the US administration to resume talks,'' the Minister said.

Mr Chidambaram decried attempts to restrict energy consumption by countries like India and China.

''Fast growing, populated developing countries will consume more energy. We are not running away from our responsibilities. Although the debate on restrictions on energy consumption, for environmental security, are relevant, the dice seems to be loaded against countries like India and China that are trying to grow fast today,'' he said.

The Minister was concerned that in the event of growth rate of India and China are slowing down, as a result of these restrictions, the achievement millennium development goals will be impaired.

Lauding the Indo-US Nuclear deal, Mr Chidambaram said this was a landmark step in accessing civil nuclear energy.

He expressed the hope that the newly elected members at US Congress will not come in the way of the deal going through.

The FM said while both the United States and India are likely to maintain robust growth, the concerns of developing countries have also to be kept in view.

Striking a different note, Prof Glenn Hubbard, Dean of Columbia Business School, said the strong productivity growth and flexibility of the markets will keep the momentum of the global economy going.

He was of the view that the political change in the US will not have any dramatic impact on the global economy.

Chairman of the Prime Minister's Economy Advisory Council C Rangarajan highlighted the relevance of global imbalances, particularly the whopping Current Account Defeicit.

''This needs correction, US needs to raise its savings rate.

Action is called by the US and the rest of the world to work on the imbalances,'' he said.

The eminent economist was of the view that the closer engagement between India and the US will be of neccessity entail correcting the current account defeicit as well as the global imbalances.

UNI