Limited impact of US debt crisis, Indian economy resilient: RBI

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The Reserve Bank of India (RBI) Monday said the crisis emanating from downgrading of the US sovereign debt rating would have only limited impact on India and highlighted the Indian economy's resilience amid the global financial crisis.

"As Friday's market behaviour demonstrated, India is not insulated from such developments. It may, however, be noted that in the worst phase of the recent global financial crisis, the economy grew by 6.8 percent, suggesting high resilience emerging from domestic factors," said RBI in a statement .

"While downside risks to growth may have increased in the wake of global developments, they are likely to have limited impact," the apex bank added.

The downfall in global markets continued on Monday after top credit rating agency Standard and Poor's downgraded the US sovereign debt rating last Friday and cautioned of a further downgrade if the fiscal position of the country did not improve.

The news sparked off a panic sell-off in stock markets across the world.

"The downgrade has raised concerns of continuing turmoil in global financial markets, as investors re-allocate portfolios in response to heightened risk perceptions stemming from both developments," said RBI.

"The policy and regulatory framework must anticipate and be prepared to respond to turbulent financial market conditions arising out of external developments," it added.

The central bank also said that it had sufficient foreign exchange reserves to meet any surge in capital outflow.