Onboard Air India One, Sept. 24: While India Incorporated pundits are worrying about the spillover effect of the sub-prime crisis in the United States; the Indian Government believes the recent economic meltdown that has devastated the robust American banking sector, will have no direct impact on India thanks to the overflowing foreign cash reserves, the regulatory nature of our banking sector and the carefully calibrated, cautious and gradual liberalization policy designed by architects of the economy.

The Deputy Chairman of the Planning Commission, Montek Singh Ahulwalia, told reporters: "Our banking system is not directly exposed to any significant extent to what are now called toxic acids."

Singh, who is accompanying the Prime Minister, Dr. Manmohan Singh, to the United States further said: "I have seen the numbers of the estimated exposure, it is very very small ".

However, he admitted that if this uncertainty continues for long then it will have an indirect fall out on the Indian economy.

Analysts feel that despite the frantic efforts by the Bush Administration to bail the country out of this crisis, the Wall Street meltdown will be protracted and might spillover into the next calendar year.

While the United States and other Western economies continue to plunge into their respective economic crises, Asian giant India feels that emerging economies can play a vital role in the stabilization of the world economic system.

"BRIC (Brazil, Russia, India and China) can play a vital role in future to shape up the world economy," Dr. Alhuwalia said.

He emphasized the need for adopting a cautious approach in the liberalization process, but added that there is no need for slowing down on this count.

If Dr. Alhuwalia''s assessment on inflation comes true, it would be good news for the middle and lower income groups which are facing back breaking steep pricing for the last few months.

Ahulwalia believes the government is taking various measures to curb inflation and that it will come down to a single digit figure over the next calendar year. 

If this happens, it will not only mitigate the miseries of the common man, but could also result in major electoral gains for the Manmohan Singh Government which has been pushed on the back foot on the issue both by the Left and the Right. (ANI)