NEW DELHI - India Feb 6 said it saw no signs of the global economic crisis abating in the near future and prescribed higher public spending to prop up rural economy in developing countries to begin a turnaround.

With the financial meltdown eating into global economic growth, including India’s own, External Affairs Minister Pranab Mukherjee, who also holds the finance portfolio, warned that ignoring rural economy could prove to be disastrous.

“The speed and ferocity of this crisis does not indicate any signs of abating. There are still no indications as to how (crisis) will progress and as to when it will bottom out,” he said, addressing a conference on financial crisis and global economic governance organized by Research and Information System (RIS) here.

The IMF has already cut global growth forecast for 2009 to 0.5 per cent from 2.2 per cent predicted only three months ago. Indian economy, which had seen over 9 per cent growth for four years, is expected to see just near 7 per cent expansion.

“The global financial institutions need to put more resources for the developing countries in rural economy, build social infrastructure... As next year’s outlook is more downbeat... the Government will take further steps to ensure that the labour-intensive sectors are less adversely affected,” Mukherjee said.

“As this is a watershed moment in the history of the modern world, we need to think hard about the shape of its future... resources must be put in institutional capacity building,” Mukherjee said at the conference attended, among others, by Asian Development Bank President Haruhiko Kuroda.

The minister said he saw the need to revisit Gandhian economics with emphasis on rural self-help and sustainable economic development. “Anything contrary would be disastrous.”

Nearly 70 per cent of India’s population depends on agriculture for income and for long, the criticism has been that the bolting economic growth of the past few years has not fully percolated to the rural areas.

Mukherjee said since next year’s economic outlook was “more downbeat,” the government has taken and will take further steps to ensure that labor intensive sectors are less adversely affected.

Commerce Secretary G K Pillai had this week, quoting estimates, said that about 1.5 million people employed in export sector would be out of jobs by March this year. (PTI)