European debt crisis could hit exports: Mukherjee

Finance minister Pranab Mukherjee said yesterday that though a deepening debt crisis in Europe could hit exports and growth of India and other emerging economies, the risk would not deter India from gradually tightening up fiscal and monetary policies.

India will keep rolling back the economic stimulus measures introduced during the financial crisis and continue to hike interest rates despite uncertainty linked to euro zone's debt woes, Mukherjee said.

Mukherjee was speaking to a television channel on the sidelines of the meeting of G-20 finance ministers in the South Korean city of Busan yesterday.

Responding to a question about whether the impact of Europe's debt crisis on the global economy was a reason to hold back further interest rate increases despite the buoyant growth registered last month, Mukherjee said India would not pause them.

RBI hiked rates in March and April by 25 basis points and signalled more hikes would follow at its last quarterly policy review meeting in April. However, in the backdrop of volatility and concerns that Europe's efforts to rein in debt would hit global growth, doubts are being raised on the scope of monetary tightening by major central banks, say analysts.

Such concerns have also led to suggestions that major emerging markets economies, such as China, India , Brazil and Russia, should help sustain global recovery by delaying the exit from loose policy regime introduced during the global downturn.