Global economic crisis presents many lessons, says IMF chief

New Delhi, Mar 20 (ANI): International Monetary Fund (IMF) Managing Director Christine Lagarde on Tuesday said the global economic slowdown has presented many lessons, and added that the financial sector, which has been identified as a 'high contagion' agent for the crisis must aid growth, not threaten it.

Addressing at a New Delhi conference on sustaining high-quality growth in India and China, Lagarde billed the financial and real estate sectors as the prime causes of the global financial crisis.

"We've also identified that the financial sector and financial institutions were high-contagion agents for the crisis, and that tells us, I think, a lot about where reforms have to focus going forward, both in the advanced economies and the emerging markets," said Lagarde.

"Whether it is China or India, the financial sectors and the financial institutions have to be strong, have to be agents for growth and not a threat to growth," she added.

Referring to the financial crisis in the Euro zone, the IMF chief said concerted efforts by some European nations and the European Central Bank (ECB) had pulled the continent further away from the brink, though several challenges still remained to be tackled.

"Thanks to the ECB, thanks to the European partners really addressing the issue of governance and thanks to the European partners and the IMF really focusing on what needs to be improved, we are further away from the abyss than we were three months ago, but there are still some really significant vulnerabilities and fragile areas that need to be tackled, that need to be addressed with rigour and vigour in the months to come," Lagarde said.

Meanwhile, Union Commerce and Industry Minister Anand Sharma termed the ongoing economic slowdown as more severe than the one preceding it in 2008.

"Unlike the previous crisis, this (one) is very deep and severe, and the recovery is uneven. It has tested the leadership of the policy planners, leadership of the countries and also, many of the economies, whether in the developed world and more so, in the small and vulnerable economies," said Sharma.

"There has been a social dimension of this crisis, when you look at the growth of joblessness," he added.

Speaking on boosting investment in India, Sharma said seeking unanimity on key decisions was unrealistic, adding that a broad consensus was motivation enough to take steps forward.

"It is expected of us to have the courage, the conviction to move forward despite the challenges. Recognising them does not mean that we give up before trying to persuade the naysayers, and again, not to wait for unanimity, because that will elude you anywhere in the world, whether in India or China, as long as you have a broad-based consensus," he said.

Sharma further said bureaucratic red tape and corruption had been a hindrance to increasing foreign investment.

"If people make investment decisions, and if they have to run from pillar to post to get the mandatory approvals (and) clearances, then it is very frustrating. The longer the red tape, depending on where you go, it strangulates in any case, whether long or short. It also breeds other issues like allegations of corruption when the files are delayed," said Sharma.

"That is why, for the first time, through the creation of the NIMZ that we have envisaged, National Investment and Manufacturing Zones or the integrated industrial townships, India has now created an effective one-stop shop for a single window clearance mechanism," he added.

Lagarde, accompanied by a high level delegation, is on a two-day visit to India aimed at strengthening relations with the Asian powerhouse economy. (ANI)