Dubai World crisis blown out of proportion: Minister

Kochi, Nov 29: Minister of State for Railways E. Ahamed Sunday said the multi-billion-dollar debt default risk faced by Dubai World, among the largest conglomerates in the region, has been blown out of proportion and would not have any impact on India.

"Our country came out unscathed when the economic slowdown affected several countries and what happened in Dubai is a minor issue. There is need be no worry at all," Ahamed, who is from Kerala, told reporters.

The statement comes a day after Finance Minister Pranab Mukherjee said there was no need to panic over the crisis at Dubai World.

"There is no need to press the panic button. Let us wait and watch what has happened recently. I don't visualise it is going to have an earth shaking adverse effect," Mukherjee had said.

The state-run Dubai World stunned the global financial world Thursday when it announced it would need to restructure its debt, estimated at USD 59 billion, to pre-empt default and asked creditors for a six-month deferment.

The conglomerate has a host of companies under its fold with interests in a wide range of businesses such as realty, infrastructure, logistics and economic zones. It operates not just in the region but across a clutch of countries including India.

The total debt of Dubai as an emirate is estimated at USD 80 billion.

However, Kerala Finance Minister Thomas Isaac, a former economics professor at the Centre for Development Studies (CDS) here, Friday said the Dubai World's debt woes would hit the state's economy.

"This is certainly going to hit the Middle East, which means this is bad news for Kerala. Anyway, it is early days yet but we will have to closely watch the situation," Isaac told IANS.

For Kerala, the Middle East has been the backbone of its economy for close to three decades now.

A CDS study says the number of emigrants from the state went up from 1.84 million in 2003 to 2.19 million last year, while remittances shot up from Rs.18,400 crore to Rs.43,300 crore.

According to the CDS study, an estimated 800,000 migrants from Kerala live in the United Arab Emirates.