Indian PM urges Europe to act on financial crisis

Indian Prime Minister Manmohan Singh urged European leaders to take "resolute action" to tackle the financial crisis in the eurozone as he departed on Saturday to attend the G20 summit in Mexico. Singh described the situation in Europe as one of "particular concern" to India, where the economy grew just 5.3 percent in the January-March period, its slowest quarterly expansion in nine years. "Continuing problems there (Europe) will further dampen global markets and adversely impact our own economic growth," he said. "It is our hope that European leaders will take resolute action to resolve the financial problems facing them," he added. India's once-booming economy has been hurt by a lack of economic reforms, high interest rates, and plummeting business confidence. Both Singh and finance minister Pranab Mukherjee have blamed the eurozone debt crisis for straining India's economy, saying that the global slowdown has left them with less room for manoeuvre. Singh's government is also under pressure to rein in subsidies and other spending after the budget deficit widened to 5.75 percent of gross domestic product in the fiscal year ended March 31. Earlier in the week, Standard & Poor's warned India could be the first of the BRIC emerging economies to lose its investment-grade rating unless the Asian giant revives its growth and spurs reforms. In April, the firm changed India's credit outlook to negative from stable, maintaining India's rating at "BBB-" but warning it faced at least a one-in-three chance of losing its status if its public finances worsened. "BBB-" is just one notch above "junk", which carries an increased risk of default and would see India having to pay higher interest rates on its public borrowing.