New Delhi, Oct 13: Finance Minister Chidambaram assured that Indian economy is strong enough to weather the global financial storm and asked the investors not to panic. Market was up 344 points as soon as FM assured more liquidity will be provided.
Chidambaram on Monday, Oct 13 said the government will shortly announce more measures to infuse liquidity, make credit intermediation smoother and increase the confidence of depositors and investors. At a press conference here, Chidambaram left enough hints to indicate that these measures will take into account the concerns of the capital market, money market and the foreign exchange market.
''The government, RBI and SEBI have been in close consultation with each other during the weekend. I have spoken to the RBI Governor and Chairman SEBI several times in the last two days. We are co-ordinating our actions. We are watching the situation carefully and we will respond swiftly according to the needs of the situation,'' Chidambaram said.
The Finance Minister said Indian Banks were willing to provide credit.''Suitable advisories are being issued to the Banks,'' he said.
Chidambaram said the root cause of the present uncertainty was liquidity and not any dramatic change in the fundamentals of the economy and gave a categorical assurance to depositors that they ''had nothing to fear because their deposits in banks are safe''.
The Finance Minister's statement came just ahead of the opening of the bourses.
Mr Chidambaram suggested to investors to ''remain confident and respond to the situation in a cool and mature manner''. ''We must banish fear,'' he quipped. He advised the investors to take informed decisions. ''Before you sell, you must remember that for every seller there is a buyer. You must ask yourself why the buyer is buying in these times of perceived uncertainity and, therefore, ask yourself the further question whether there is need to act in haste or panic. In my view, there is no reason at all to act in haste or to give room for panic,'' he said.
''If all the players in the economy remain confident and take informed decisions, I have no doubt that the Indian economy will weather the current storm and emerge stronger,'' he said.
Mr Chidambaram said that over the weekend, the United States, the United Kingdom, the Euro zone and Australian authorities have announced a number of measures to stabilise the financial system.
The Australian capital market and three of the East Asian capital markets have opened on a bright note this morning, he said.
''I expect that our capital market will also take its cue from these positive developments,'' Mr Chidambaram said.
Mr Chidambaram said he had met Prime Minister Manmohan Singh twice in the last few days in connection with the global financial crisis and its impact on India. The last meeting he had with him was in yesterday evening. In reply to questions, Mr Chidambaram repeatedly said the measures to boost liquidity and strengthen investor sentiment would be announced soon.
On questions relating to the Rupee, he said the government did not have a view on the Rupee, but it would find its own level.
Mr Chidambaram said the high powered group, headed by Finance Secretary Arun Ramanathan, to look into the credit needs of various sectors will have its first formal meeting this afternoon. Over the weekend, members of the Group had confered with each other. The Group will address itself to the demand side of the problem.
Asked to comment on the reports that there was a run on the deposits of some private banks, Mr Chidambaram described these reports as "baseless." In this connection, he advised journalists and commentators to file reports only after doing a good amount of research and not on the basis of rumours.
Mr Chidambaram said that in a democracy views were welcome and respected, but they must be well researched and carry credibility.
The Finance Minister said the Indian economy continued to grow at a satisfactory rate. As recently as last week, the IMF's Research Department noted that the economy would continue to do well despite the impact of the global liquidity crunch.
He noted that as per the projections made by the IMF, India was expected to post GDP growth of 7.9 per cent during the current fiscal year.