 "Brexit aftermath: Jaitley leads firefight to win investors' faith")
The finance ministry on Friday sought to assure investors India was well prepared to deal with the short term volatility as well as the medium-term outcome of Britain’s decision to quit the European Union.
Finance Minister Arun Jaitley said the country had immediate and medium-term firewalls in the form of healthy forex reserves and the government would carry out economic reforms in the medium term, including introduction of the goods and services tax.
In a post on his Facebook page, Jaitley said the impact of Britain’s referendum on financial markets would not last beyond a few days.
The minister, who is on a five-day visit to China, also said in Beijing, “Now instead of one entity (the European Union) we have to deal with two (EU and UK).”
“Our macroeconomic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation,” he said.
“Our aim will be to smoothen this volatility and minimise its impact on the economy in the short term,” he added.
Stating India respected the referendum’s verdict, Jaitley said, “We are also aware of its significance. In this globalised world, volatility and uncertainty are the new norms. This verdict will contribute to volatility.”
“I hope this is only a temporary phenomenon where popular thinking and governmental thinking are at variance,” he added. Minister of State for Finance Jayant Sinha said, “We need to brace ourselves for short-term knee-jerk global reactions. Markets will find their own level. We have to ensure we allow markets to adjust.”
Economic Affairs Secretary Shaktikanta Das said with comfortable foreign exchange reserves, inflation coming down and structural reforms on path, India would be able to deal with all eventualities.
“As far the as the stock markets are concerned, it is an initial spontaneous reaction because something goes beyond expectations. This reaction should stabilise,” he said. Das said the depreciation of the rupee was in line with other Asian currencies.
Jayant Sinha said, “India is, in fact, a haven of stability. Both our macroeconomic fundamentals as well as our reform and growth agenda, are strong. We have a fortress balance sheet in terms of our reserves, and our relative stability as well,” he said.
On Indians-owned companies in the UK, he said, “Whatever support is required on the trade side or in terms of negotiations or discussions with other sovereigns, we will be there to support them,” he said.
Chief Economic Advisor Arvind Subramanian said,” Let us not see this as unremittingly gloomy. There are a couple of silver linings. Oil prices have come down. That is good for India’s macro situation.”
With this uncertainty and flight to safety it is looking less likely there will be an interest rate hike in the US. This, too, will work in India’s favour.”
Finance Secretary Ashok Lavasa said the government and the RBI were ready with measures to curb volatility. Banking Secretary Anjuly Duggal said Brexit would not impact India in the medium or long term.
Finance Minister Arun Jaitley said the country had immediate and medium-term firewalls in the form of healthy forex reserves and the government would carry out economic reforms in the medium term, including introduction of the goods and services tax.
In a post on his Facebook page, Jaitley said the impact of Britain’s referendum on financial markets would not last beyond a few days.
The minister, who is on a five-day visit to China, also said in Beijing, “Now instead of one entity (the European Union) we have to deal with two (EU and UK).”
“Our macroeconomic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation,” he said.
“Our aim will be to smoothen this volatility and minimise its impact on the economy in the short term,” he added.
Stating India respected the referendum’s verdict, Jaitley said, “We are also aware of its significance. In this globalised world, volatility and uncertainty are the new norms. This verdict will contribute to volatility.”
“I hope this is only a temporary phenomenon where popular thinking and governmental thinking are at variance,” he added. Minister of State for Finance Jayant Sinha said, “We need to brace ourselves for short-term knee-jerk global reactions. Markets will find their own level. We have to ensure we allow markets to adjust.”
Economic Affairs Secretary Shaktikanta Das said with comfortable foreign exchange reserves, inflation coming down and structural reforms on path, India would be able to deal with all eventualities.
“As far the as the stock markets are concerned, it is an initial spontaneous reaction because something goes beyond expectations. This reaction should stabilise,” he said. Das said the depreciation of the rupee was in line with other Asian currencies.
Jayant Sinha said, “India is, in fact, a haven of stability. Both our macroeconomic fundamentals as well as our reform and growth agenda, are strong. We have a fortress balance sheet in terms of our reserves, and our relative stability as well,” he said.
On Indians-owned companies in the UK, he said, “Whatever support is required on the trade side or in terms of negotiations or discussions with other sovereigns, we will be there to support them,” he said.
Chief Economic Advisor Arvind Subramanian said,” Let us not see this as unremittingly gloomy. There are a couple of silver linings. Oil prices have come down. That is good for India’s macro situation.”
With this uncertainty and flight to safety it is looking less likely there will be an interest rate hike in the US. This, too, will work in India’s favour.”
Finance Secretary Ashok Lavasa said the government and the RBI were ready with measures to curb volatility. Banking Secretary Anjuly Duggal said Brexit would not impact India in the medium or long term.