Seeking to calm panic-stricken investors, Finance Minister Arun Jaitley today said they need not fear any "knee-jerk" reaction from the government on the SIT report, which had recommended tough measures to check investment flows through P-Notes.
He also assured investors that the government will not take any action that may jeopardise investment climate even as the benchmark BSE Sensex tanked close to 500 points on fears of action on the suggestions of the Supreme Court appointed Special Investigation Team (SIT).
Participatory Notes (P-Notes) are used by large number of foreign investors to invest in equity markets without disclosing their identity to the market regulator Sebi.
"It is too early to say what view the government would take. But the it will certainly not take any such action in a knee-jerk reaction, particularly one which has any adverse impact on investment environment," Jaitley told reporters in his Parliament House Office.
Meanwhile, Revenue Secretary Shaktikanta Das too said there was no need to "panic" and the Finance Ministry will take a view on the SIT suggestions only after consultations with Sebi, RBI and other institutions.
The SIT had suggested Sebi to put in place regulations to help identify individuals holding participatory notes or offshore derivative instruments (ODIs), and take other steps required to curb black money and tax evasion through the stock market route.
The BSE tanked 494.52 points or 1.76 per cent to 27,617.79 in afternoon trade, while rupee fell to 64.03 against the US dollar in late morning deals.
Das also said: "at the moment there is no need to panic. We will take views after consultation with stakeholders including Sebi, RBI and related institution... There is no need for markets to react in any particular manner".
A similar recommendation in 2007 had triggered a major collapse in the stock market, prompting the then Finance Minister P Chidambaram to announce that no such measures would be taken by the government.
