India will be resilient to global economic turmoil
India’s central bank authorities sought to calm down the markets on Monday, assuring them that the economy would remain resilient to the ongoing global economic turmoil brought about by the downgrade of the credit rating of the US.
According to the Reserve Bank of India (RBI), while the market behavior was not insulated from the effects of the downgrade of the US’s credit rating as with the other global markets, the impact would be very minimal, pointing to the fact that during the previous global financial crisis, it’s economy was one of the very few that actually experienced some form of growth.
“In the worst phase of the recent global financial crisis, the Indian economy [actually] grew by 6.8 percent, suggesting that we have a high resilience emerging from domestic factors,” it said.
The assurance of RBI echoed the comments made by Finance Minister Pranab Mukherjee who insists that India’s economy, which is the third largest economy in Asia, will be able to weather out any “negative sentiments affecting the external world.”
Because of this, RBI stated that it did not see any immediate need for liquidity stress on the country’s banking system. Rather, their priority is to ensure that proper measures are taken to guard the economy from any turbulence that will be brought about by changing interest rates.
“In the immediate future, our priority is to ensure that adequate rupee and forex liquidity are maintained [within the] domestic markets to prevent excessive volatility in interest rates and exchange rates,” it said.
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