New Delhi, Sep 19 (UNI) With the US financial turmoil threatening the financial architecture, Prime Minister Manmohan Singh today asked his Cabinet colleagues to be alert on the emerging situation.
The Prime Minister's remarks came during an unscheduled meeting of the Cabinet Committee on Economic Affairs(CCEA), which lasted nearly an hour.
Finance Minister P Chidambaram briefed the Cabinet about the financial crisis in the United States while stating that the Indian economy was relatively insulated from global turmoil, including the US financial crisis.
''The Prime Minister asked the Ministers to stay alert on the global financial situation," Rural Development Minister Raghuvansh Prasad Singh told reporters after the CCEA meeting.
Mr Chidambaram noted that Indian Banks have low exposure to the US markets.
A number of key policy makers expressed similar views.
Planning Commission Deputy Chairman Montek Singh Ahluwalia said the direct impact of the US financial crisis will not be significant on the Indian financial system, even though there may be some indirect outcome by way of reduction in foreign flows.
However, in view of the comfortable foreign exchange reserves the resultant adverse influence on the foreign flows can be managed without any significant impact on the economy.
Prime Minister's Economic Advisory Council Chairman Suresh Tendulkar said the Indian economy being largely domestic demand-driven would not be impacted much by the US financial crisis unless there was chaos in the domestic markets.
The US financial turmoil has engulfed a number of large corporates, such as the Lehman Brothers who have filed for bankruptcy, while another financial giat Merill Lynch had to sell its global assets at a discounted value to the Bank of America.
Global insurance giant had to get 85 billion dollars from the US Federal Reserve to prevent it from getting bust.
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