New Delhi: Finance Minister P Chidambaram met key regulators and policy makers to review the impact of the global financial crisis on the country and measures to tackle it.
The meeting, which took place at the North Block office of the Finance Minister, was attended by top economists, including RBI Governor D Subbarao, RBI Deputy Governor Rakesh Mohan, plan panel Deputy Chairman Montek Singh Ahluwalia and Sebi Chairman C B Bhave.
Coming out of the meeting, former chief of PM’s Economic Advisory Council C Rangarajan said that they deliberated on the international financial crisis and its implications for emerging economies.
He said that the meeting also discussed the stance that India may take at the Summit on ‘Financial Market and the World Economy´ convened by the US at Washington on 15 November.
Among other things, the G-20 Summit will discuss the effects of the current crisis on emerging economies and developed nations.
Besides, 13th Finance Commission Chairman Vijay Kelkar, former RBI Governor Bimal Jalan, Finance Secretary Arun Ramanathan, Department of Economic Affairs Secretary Ashok Chawla, and other officials were present at the meeting.
The global financial meltdown triggered by the sub-prime mortgage crisis in the US has already resulted in the failure of 16 banks in the US and rescue of several others in Europe.
The ripple effects of this crisis are being felt in the emerging economies, including India, which has been witnessing a liquidity crunch, besides sharp erosion in value of stocks at bourses.
To ease liquidity crisis, the RBI and the government have initiated host of measures, including 250 basis points cut in mandatory deposits that banks keep with central bank.
During this month, RBI has pumped in Rs1,85,000 crore into the banking system.
At the same time, market regulator Sebi has allowed promoters to increase their holding in their companies up to 75% through creeping acquisition route.
The measure is expected to boost the market sentiment as promoters will be tempted to resort to creeping acquisition given the current depressed prices of their shares.
Outgoing US President George Bush has called a meeting of G-20 to discuss the global financial crisis and work out a joint strategy to deal with the emerging situation.
Besides, the US, the members of G-20 includes India, Australia, Brazil, Canada, China, France, Germany, Italy, Japan, Russia, the UK and European Union.
In order to deal with the financial meltdown, the US has already come out with about $700 billion bailout package but the efforts have failed to restore the investor confidence as stock markets continued to move southward.