Markets were euphoric on Thursday over the US Federal Reserve's decision a day earlier to hold tapering of quantitative easing. The Finance Ministry, on the other hand, gave a stoic reaction as if nothing would have happened if the US central bank had taken a different stance. However, the undertone was of big relief, if not outright jubilation.
When asked to comment on the Federal Reserve's decision, Finance Minister P Chidambaram did not oblige reporters.
However, economic affairs secrertary Arvind Mayaram said," We should not overly put emphasis on the decisions of the Fed in the manner in which the economy will unfold...It is business as usual for us, as far as we are concerned."
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Approach of the Finance Ministry, at least officially, has been that investors should look at fundamentals of the economy and not one decision of the US Federal Reserve.
On Thursday too, Mayaram said,"I think we will need to continue to deepen our own reform process so that we continue to strengthen the economy. We believe with the steps that the government has taken, the economy will continue to show signs of growth and that is what is going to strengthen the rupee and strengthen the markets."
Financial services secretary Rajiv Takru said the country has to plan for its interests. "...we have to plan in our interests. And we were ready for any kind of a decision which was taken. So we are happy, I think we were ready for both."
However, underline tone in the ministry was a sigh of relief. An official said he does not want to react too much, but he was happy over the decision. "By the time, the Fed starts tapering, our economy would recover and we would be in a better position to manage it."
Though not part of the finance ministry any longer, former RBI governor Bimal Jalan said what Federal Reserve's decision has done is to give us time.
"I am glad. It was a surprise. He (Ben Bernanke) has done it. Tapering will happen, but it gives us time. You can't keep on pumping money. No country can. Tapering will happen. But, it gives us time to do what we want to do," Jalan told reporters after meeting some ministry officials in the North Block.
Mayaram said it would have been better if the US central bank had given some kind of direction on future tapering. "It would have been good if there was some kind of policy guidance (from the Fed) so that there was certainty as to how the taper will happen, but nevertheless we believe what we are doing is right."
Jalan said now the economy will be better prepared for future tapering. "Now we are not dependent on what Fed does, we are only dependent on what RBI does," he said as all attention now moves to action by the Reserve Bank on Friday.
Jalan, who was RBI governor, between 1997-2003, did not want to indicate what he thinks new RBI governor Raghuram Rajan will do, but said the Fed's decision is bound to be considered by the Reserve Bank.
"It does not require any experience with Reserve Bank to know that if something like this happens it would be factored in," Jalan, who had also served as the chief economic adviser in the finance ministry, said.
When asked with inflation running high, can RBI tinker with monetary stance, he said RBI can always do something here or there.
"There is always a trade off. You have to choose what needs special attention this time. You have all the figures," he responded to a query.
However, an official in the finance ministry did not hide his jubilation over the Fed's move. It was a big, big surprise, he said.
Now, investors are not jittery over the uncertainty relating to tapering and the government gets time to do all for boosting growth. The task ahead is to make that happen, he said.
The Fed on Wednesday surprised the markets by continuing with its monthly USD 85 billion bond buying programme for want of solid evidence about growth recovery.