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RBI Guv: Indian financial market not vulnerable to global slowdown
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SPECIALCORRESPONDENT on 16 April, 2008 10:04:00
 
This view of India's premier financial and banking institution has come at a
time when the UPA at the centre has been saying that the uncontrolled price rise
in the country is the result of the global phenomenon of soaring inflation.
Speaking at the World Leaders Forum in the city on Tuesday, the Reserve Bank of
India (RBI) Governor Y V Reddy said, "The securities and foreign exchange
markets, have been stable in India and, in our view, they may not be vulnerable
in terms of direct and first-round effects (of global slowdown)."
On the other hand, only a couple of days ago, Finance Minister P Chidambaram
attributed the rising inflation, which touched 7.41% mark for the week ending on
March 29, to the global price rise. He had cited the land use policy of the US,
in particular, responsible for the surge in prices in India. With today's
statement of the RBI chief the economic confusion prevailing in the country is
only expected to deepen further.
However, Reddy seems quite convinced about the relative strength of the Indian
economy, as he said, "In our assessment, the Indian financial sector is likely
to be less affected by the contagion than most other emerging market economy
(EMEs), in respect of first-round or direct effects." He also added that the
Indian equity markets have been volatile in the recent months and that has some
impact on changing sentiments.
Referring to the current turbulence in the market, the Governor of the
'banker's bank' said, India has not been contributing in the global macro
economic imbalances, "though it has a stake in how the issues get resolved in
the near future."
Although, he added, the huge forex (foreign exchange) reserves of USD 300
billion were being managed by the apex bank of the country as per the
International Monetary Fund guidelines. (Based on PTI Reports)