The government today attempted to calm nervous investors and boost confidence in the Indian economy, with Finance Minister P Chidambaram saying more steps would be taken, if required, to ease the domestic liquidity situation.
Separately, Commerce Minister Kamal Nath said that the Indian economy had strong fundamentals, even as Planning Commission Deputy Chairman Montek Singh Ahluwalia said that inflation has softened and will come down to high single-digit in a couple of months.
He added that what is happening in the stock markets “is a matter of concern to investors," but hoped the situation would improve once global markets stabilise.
Speaking to reporters outside his office at North Block, Chidambaram said: “If needed, we will take further measures to infuse liquidity in the market. Everybody in the world is doing it. We are not affected to the same extent (by the global financial crisis), but to the extent there is shortage of liquidity in the Indian market, we will provide liquidity. I am hopeful investors will start coming to the market.”
Chidambaram added that the fundamentals of the Indian economy are still strong. “The economy is still humming with activity and is growing”, he said.
Earlier this week, the Finance Minister had said that he expects the economy to grow 8 per cent this fiscal year and 9 per cent in 2009-10. However, other forecasts say growth will ease to between 7.5-8 per cent this fiscal.
Echoing the FM’s views, Nath said India had strong fundamentals to tide over the global financial crisis. “Our regulatory mechanism for the financial system should be a model for the world. We have no bubbles to burst. Indeed, FIIs are pulling out money but much of this is a frenzy effect and has nothing to do with the fundamentals of our economy”, he said.
“In the United States, it is a question of return of investments, while in India every one is talking of return on investments. Our financial system and the real economy are in convergence. In US, the financial system is in its own orbit”, Nath added.
