By IANS,
New Delhi : Finance Minister P. Chidambaram Monday once again asked investors not to panic, saying India will weather the impact of the global financial storm, even as an expert panel debated the steps needed to address the liquidity problem in the country.
India is maintaining a high vigil to tackle repercussions of the global meltdown, Chidambaram said, adding there was “no reason at all to give room to panic”.
“In my view, there is no reason at all to act in haste or to give room for panic,” said Chidambaram Monday morning at a press conference in an attempt to infuse confidence in investors and allay their fears.
“We must remain confident and respond to the situation in a cool and mature manner. We must banish fear. Especially, depositors have nothing to fear because their deposits in banks are safe. Investors must take informed decisions.”
Chidambaram’s comments, along with the positive developments in the global markets, lifted a key Indian equities index by nearly 800 points, or over 7 percent, with the mood getting a further boost with calming statements by the panel headed by Finance Secretary Arun Ramanathan.
“We have shared thoughts on what are the requirements. We need to address the liquidity demand,” said Ramanathan after the panel’s meeting.
He said the ways would be found to extend much credit to India’s financial system. “We have shared thoughts on what are the requirements. We need to address the liquidity demand,” he added.
Expressing confidence that the Indian financial system would tide over the current crisis, the Prime Minister’s Economic Advisory Council (EAC) chairman Suresh Tendulkar said there was no need to press the panic button.
“Indian capital market will certainly be responding in accordance with the strong fundamentals of the country’s economy,” Tendulkar told IANS, adding India would log around 8 percent growth in the current fiscal.
Last week, the International Monetary Fund’s (IMF) research department noted: “The Indian economy would continue to do well despite the impact of the global liquidity crunch.”
As per projections made by the IMF, a financial body under the UN to help out the countries financially, India is expected to post a gross domestic product (GDP) growth of 7.9 percent in 2008-09 fiscal.
Finance Minister Chidambaram, who has identified liquidity as the root cause of the present uncertainty, said the Reserve Bank of India (RBI) – India’s central bank – had taken measures to infuse an additional Rs.600 billion (Rs.60,000 crore) into the financial system.
“The problem has been identified as liquidity,” he said, emphasising that the Indian economy was predicted to grow at a robust pace, the invest rate was high and tax collections were on the rise.
The high-level panel headed by Ramanathan, which has to submit a report to Chidambaram in a week’s time, is likely to visit Mumbai to hold deliberations with financial sector regulators such as the central bank and the markets watchdog, said finance ministry officials.