Stating this, Montek S Ahluwalia, Member, Planning Commission, said at a session on "From the Asia financial crisis to a global crisis : What Perspectives for India, Europe and the world economy", that India was, expected to perform much better than the other East Asian economies.

The trade balance is likely to be larger and make up as much as 2-3 per cent of the GDP in the coming months, Ahluwalia said. The main concern continues to be the fiscal containment rather than the country's banking and financial system which was fortunately in good shape as a result of the government's initiatives, he added.

The net non-performing assets (NPAs) of banks have declined to approximately 8.2 per cent in 1997-98 from16.2 per cent in 1992-93, which would be much smaller after allowing for provisioning, he said.

India's vulnerability to the after effects of the East Asian crisis has been less particularly due to the fact that Indian banks do not borrow from abroad and corporates need permission to do so.

The government's efforts at laying down the agenda for banking reforms looking into aspects like prudential norms, capital adequacy and other supervisory aspects had made the banking system better, he added. This move, unlike in East Asia, had resulted in corrective measures and tighter regulations of NBFCs, minimising the dangers.

Commenting on the forecasts, Ahluwalia said that even though the crisis in East Asia seemed to have bottomed out, normal growth in this region waas unlikely for at least three more years. As far as India was concerned, Ahluwalia said that the crisis would not have mattered much if the world economy had been robust. But global economy was experiencing a slow down showing no great deal ofresilience.

Later addressing the session, Raymond Barre, former prime minister of France said that the worst was over in East Asia. This first financial crisis in the globalised world economy was a result of the volatility of short term financial movements and a correction was necessary, he felt.

The crisis had led to a fear of recession and many in Europe believed that a slowdown was in the offing - with the growth rate decreasing from 3 per cent to 2.5 per cent in 1999, he said.

Governments in Europe, hence, were cautious about new policies. Italy, Germany and France feel it will be necessary to adopt measures to ensure increase in employment and lower interest rates.

He said that India also had to review how it was using this as a warning signal for banking sector reforms.

Earlier, Claude Smadja cautioned that rating agencies, earlier complacent, had become overactive now and this trend would continue. He also exhorted India not to miss the opportunity that the crisis offered - to appear tallerand different from the affected economies.