Talking media here Finance Minister Pranab Mukherjee said: “ India’s economic fundamentals are strong and the country can withstand any adverse impact on capital and trade flows”. Mr Mukherjee said that the need was to focus more on encouraging domestic consumption and domestic growth. At the same time, the government would fast track the implementation of the pending reforms to keep up the investors confidence in Indian market, he said.
The Finance Minister also expressed confidence that India will see a greater inflows fo foreign institutional investors in view of the higher returns to global investors.
Echoing similar sentiments, Prime Minister’s Economic Advisory Council Chairman, Mr C Rangarajan said the down grading of US sovereign rating will negatively impact exports and moderate capital flows into the country. He, however, said that US economy’s slow growth is likely to impact the world more than its downgrade.
Government’s Chief Economic Advisor Mr Kaushik Basu said that the crisis in US and other nations is a matter of concern but not a matter of alarm because in the long run India’s growth story remains more or less intact.
Reacting to global events, Planning Commission Deputy Chairman Mr Montek Singh Ahluwalia said, the negative reaction in the market to the US downgrade is on expected lines. He also exuded confidence that Indian markets will stabilise in a couple of days as the economy back home is mostly domestically driven.