Amid continued nervousness in the stock and currency markets, Finance Minister Arun Jaitley today sought to calm the frayed nerves saying investors must keep faith in the “inherent strength” of Indian economy rather than getting swayed by the global headwinds.
He also stressed that the government will soon announce more steps to empower public sector banks to recover bad loans that are hurting their profitability.
Talking to reporters at the Finance Ministry a day after the stock market benchmark Sensex saw a massive 807-point plunge and rupee hit its 29-month low, Jaitley said the government will continue to pursue policies to support growth amid global slowdown.
“... It would be a part of prudent investment reaction that the inherent strength of Indian economy is kept in mind by investors, rather than react disproportionately to what the global developments are,” Jaitley said.
The minister said that a major sell-off in global markets has created a chain reaction impacting the markets world over including in India.
After yesterday’s bloodbath, the Sensex lost further ground this morning but managed to close with a gain of 34.29 points at 22,986.12 after domestic institutional investors pitched in to buy shares in afternoon trade.
Rupee ended yesterday 45 paise lower at 68.30 against the US dollar, but saw some strength coming back today.
“There could be several reasons, which are predominantly outside the country—The uncertainty in the Fed rate or what’s happening in Europe or the slowdown anticipated in China. Now, these global factors will remain and will have to be tackled globally by those economies.
“... there need not be any exaggerated panic in India for the reason that India as an economy even in the midst of global slowdown has clearly stood out to maintain a 7.5 per cent plus growth rate,” Jaitley said.
On the mounting NPAs of public sector banks, he said the government is considering more steps to empower banks to recover bad loans and the problem will be contained soon.
“The bankruptcy law is under active consideration. The government is also considering some further steps to empower banks to be in a position to recover these monies (non-performing assets). I think it is a problem which will soon come under control,” said Jaitley, who will present his second full budget on February 29.