New Delhi: With the stock markets bleeding and the rupee under severe pressure, the government sprang to action, assuring the investor community both in India and abroad, and the general public, that the Indian economy continues to be strong and there is no need to panic. Finance Minister P.Chidambaram on Wednesday said liquidity was a problem and that the government would inject cash if needed. Chidambaram also added that Indian banks are in sound financial health.
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Elsewhere in Delhi, Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, said India is waiting and watching to see if the US bailout plan succeeds. His hope is that stocks will rise once normalcy returns to the markets: “What is happening in the stock market is a matter of concern to investors, I have no doubt about it. Many people who entered stock market last year would obviously be concerned over fall in stock values. I am assuming that when normalcy is restored (in global financial markets), normalcy would also be restored to stock markets.”
Addressing a press conference in Udyog Bhavan, commerce minister Kamal Nath said, “India’s position is sound, steady, resilient and this is demonstrated by the strong exports and FDI inflows.”
According to data released by the ministry Wednesday, FDI inflows from April to August 2008 have risen 124% to $14.6 billion. The major sectors receiving FDI inflows in 2008-09 include the services sector, construction activities, housing and real estate, computer software, hardware and metallurgical industries.
Kamal Nath said while no country can remain “decoupled” from the global economic situation, India’s FDI target of $35 billion for the current fiscal would be met.
These figures give the government reasons to keep its chin up. But even the most optimistic believe that it’s best to prepare for some pain as the global contagion spreads.