NEW DELHI, Dec 19: India aims to achieve 10 per cent economic growth by 2012 but is not immune to a global credit crunch spreading from the United States, Prime Minister Manmohan Singh warned on Wednesday.

“There are some clouds on global financial markets following the subprime lending crisis... We cannot be fully immune to international developments,” Singh told top government policymakers.

The warning was the first by Singh about the fallout on India of the credit turmoil which stems from a default crisis in the US subprime mortgage sector.

The country of 1.1 billion people has been seen by many analysts as a safer investment play than other nations with its still relatively closed economy and fast-growing middle class against a backdrop of overall global weakening.

But Singh said he wanted “to sound a note of caution.” “There are worries the growth of the US and other leading economies may slow down and some may even go into a recession. This may impact both our exports as well as capital flows,” he said, as he sought approval of the government’s new five-year plan -- an economic roadmap targeting 10 per cent growth by 2012.

Liberalisation means “our economy is now increasingly integrated into the global economy with the external sector accounting for almost 40 per cent of the GDP,” he said, referring to such items as external debt and trade.

Singh launched the process of opening up India to foreign investment and trade in the early 1990s when he was finance minister.

But “it is possible with the correct set of policies... we will not only be able to maintain this momentum of high growth into the near future but may be able to raise it to 10 per cent” by 2012, Singh emphasised.

The country needs to achieve double-digit growth to lift tens of millions out of deep poverty, Indian leaders say.

India’s economy has grown by nearly nine per cent annually for the last three years, second only to China, and the boom has drawn a tide of foreign funds that has accelerated since the credit turmoil erupted earlier this year.

Foreign investment in India jumped 65 per cent to $7.2 billion in the first half of the fiscal year to March 2008, figures this week showed, while the stock market has rocketed 45 per cent this year, boosted by overseas funds.

But economists have warned of an economic slowdown in the face of high interest rates, rapid currency appreciation, weakening global demand, rising commodity prices and high global oil costs.—AFP