Acknowledging that there was a problem of liquidity in Indian markets, the minister said that his government would inject more cash if needed. Chidambaram also sought to reassure depositors about the health of Indian banking system, saying all banks were sound and well regulated and capitalised.
When asked by reporters if he had an advice for small investors, the Finance Minister said he would like the investors to take their own decisions. But he added: “Indians should feel confident about the fact that India is a growing economy."
He further listed three steps that have been taken in the past few days to ease the liquidity pressure in the Indian markets. These include a cut of 50 basis points in CRR to 8.5 percent, removing curb on P-notes and expanding ECB window to mining and oil sector.
Planning Commission Chairman Montek Ahluwalia also tried today to ease fears in the market, saying that the turmoil in stock markets was “a global crisis" and “India is not alone".
“There is nothing to worry about. We have to wait and watch if the US bailout plan succeeds," Ahluwalia told reporters.
When asked in how much time the markets would recover, Ahluwalia said it was not possible for him to give a timeframe.
He added investors should not panic and that RBI is watching the liquidity crunch in the markets.