TOKYO, October 22 – Indian Prime Minister Manmohan Singh called Wednesday for developing nations to play a role in resolving the global financial crisis, warning that the turmoil had effects worldwide.
Singh made his appeal on a visit to Japan, Asia\’s largest economy, where he was due to hold talks on securing an elusive free trade agreement.
"Developing countries like India are also affected by the crisis and have to be part of the solution," Singh told a luncheon with Japanese business leaders.
He said that India hoped to play a greater role in moves to step up surveillance and regulation of the global financial system. India and other developing countries are expected to take part in an upcoming emergency summit on the turmoil.
The crisis was sparked when toxic assets overwhelmed some of Wall Street\’s biggest banks. But the Indian stock market has also been hit and is now trading 50 percent below January levels.
The central Reserve Bank of India on Monday cut its lending rate for the first time since 2004 and Singh conceded this week that the country would face a "temporary slowdown" from "the ripple effects" of the crisis.
Singh, however, told the Japanese audience that India would return to the recent growth level of nine percent a year once the global crisis eased.
"Fundamentals of the Indian economy have been and continue to be strong," said Singh, who was credited with opening up India\’s economy to the world when he was finance minister.
Singh was due later Wednesday to hold talks with Japanese Prime Minister Taro Aso on reaching a free-trade agreement and promoting cooperation on nuclear energy.
The negotiation of the free trade agreement "remains a very high priority" for India, Singh told the Japanese business leaders, adding that the deal would "broaden our trade basket and enhance reciprocal investment."
"Working towards an integration of the economic community should be a common endeavour for both India and Japan," he said.
Singh said earlier that he had hoped to seal the free trade deal with Japan by the end of the year.
But the two countries missed a goal of wrapping up the agreement by mid-2008 due to disputes over how much to cut tariffs and whether Japan would ease its tight restrictions to permit imports of Indian generic drugs.
Aso, a former foreign minister who took office a month ago, is a long-time advocate of improving relations with India to offset ties with China, which are often strained by memories of Japan\’s past aggression.
Singh and Aso are expected to sign a loan agreement for Japan to fund a 1,468-kilometre (912-mile) rail connection between New Delhi and Mumbai. India has identified improving its creaky infrastructure as key to sustaining its high rates of growth.
The prime minister urged Japanese business leaders to invest more in India.
"We welcome Japanese investment in our effort to build a new dynamic India," he said. "We have begun to attract investment from Japan, but it is much less than its full potential."
Despite warming political ties, India and Japan both trade far more with China.
Singh and Aso were also expected to discuss cooperation on nuclear energy, although a Japanese official said they were unlikely to reach any deals.
Japan, the only nation to have suffered an atomic attack, was hesitant about India\’s landmark deal with the United States giving access to nuclear technology. New Delhi refuses to sign the nuclear Non-Proliferation Treaty.