He said 2009 will see a contraction in the Gross Domestic Product in the developed countries.

Barua was speaking on the occasion of the Central Excise Day celebrations in Ahmedabad.

He said India and China have a large domestic market, which is why the effect of the economic meltdown in these two developing countries has been less.

The two countries also have the potential to lead the world out of the meltdown effect, he said.

Barua said the Indian economy could have been improved in this crucial time. But that has not happened till now, as a less fractured Parliament has not allowed the government to introduce better financial policies.

He added that the government needs to increase its spending to effectively deal with the meltdown.