Seeking to allay fears in the wake of the economic problems in the US, finance minister Pranab Mukherjee today said India’s fundamentals are strong and the country is in a better position than other nations to meet the challenge although there could be some impact.
Mr Mukherjee said the country could see faster and greater FII inflows unlike after 2008 meltdown in view of the higher returns that global investors could get in India and that implementation of pending reforms could be fast tracked.
“The recent developments in the US and the Eurozone have injected certain uncertainty in global markets. These developments could have some impact on India. But as India's growth story is intact and its fundamentals strong, we are in a better position than many other nations to manage the challenge,” Mr Mukherjee told reporters outside Parliament House.
He said there could be “some impact” on capital and trade flows “but as India’s growth story is strong we could see FIIs viewing India as an attractive investment destination even if there is any temporary outflow.”
Mr Mukherjee asserted that India's institutions are strong and “we are prepared to address any concern that may arise on account of the present situation".
Mr Mukherjee’s observations, sounding a note of optimism, came amidst a sharp fall in the stock markets apparently in view of the downgrading of the US economy by Standard and Poor.
Insisting that India's economic fundamentals are sound, the minister said the government would also focus on encouraging greater domestic consumption and giving greater impetus to the drivers of domestic growth.
"The government will fast track the implementation of pending reforms and keep a close eye on international developments," Mr Mukherjee said.
He said softening of the international commodity prices, especially fuel oil, will help check inflationary pressures in the economy.
"It will also help in maintaining the fiscal balance for the year 2011-12," he said.