PM reviews crisis, pitches for reforms

Prime Minister Narendra Modi on Monday met Finance Minister Arun Jaitley, as well as other ministry officials, and discussed the plunge in stock markets. He pitched for reforms and step-up in public expenditure to convert the global crisis into an opportunity for India.

The finance minister said though new steps to push growth couldn’t be taken in a couple of days, reform measures in the pipeline would continue.

Read more from our special coverage on "MARKETS MAYHEM"

• Monday Mayhem: Promoters lose sizeable portion
• Falling rupee to hurt India Inc badly
• Play defence or get out
• Market mayhem
• Market fall: Dont get worked up

It was said the market volatility would continue for a while.

Briefing reporters here, Jaitley ruled out an immediate relief package. He said he was in constant touch with the Reserve Bank of India (RBI) and the Securities and Exchange Board of India on the situation in the markets. There was no payment crisis in the markets, he added.

Jaitley said the PM had taken stock of equity and currency markets and felt “our economic situation is better and more stable than other economies”, though more needed to be done. “The PM is of the opinion that to further strengthen our economy, we should take more steps,” he said, adding there would be no change in the government’s strategy and initiatives to attract investors would continue.

Further discussions, he said, would be held with private and public partners to take “measures to attract investors and use the situation as an opportunity”.

“We are not (offering) any packages as of now, as our internal fundamentals such as industrial production, capital and public expenditure have improved,” Jaitley said. There wasn’t a single domestic factor that had contributed to the fall in markets, he said. “Our fiscal deficit figures are under control. Inflation is very much under control.”

Industries, as evident from the index of industrial production, were faring well and demand would pick up further, he said.

Jayant Sinha, minister of state for finance, said the PM discussed ways to push the reforms agenda and hoped India would continue to be an attractive investment destination.

Chief Economic Advisor Arvind Subramanian said broadly, there was a fundamental reassessment of global markets.

Commodity producers, he said, were affected by the slowdown in China. He added the fall in oil prices would be akin to a further tax cut.

Earlier in the day, on the sidelines of a Central Board of Excise and Customs event, Jaitley tried to calm jittery investors, saying the turbulence in markets resulted from external factors, adding Indian markets would settle once this phase was over.

Finance Secretary Rajiv Mehrishi said, “The Indian markets have moved in line with Asian markets. As such, our markets are not out of sync with what is happening globally.”

With the rupee by 82 paise on Monday, its biggest single-day fall this year, to 66.65 against the dollar, Mehrishi said no particular target had been fixed for the rupee. “RBI will take a call on when to intervene to stem a fall in the currency,” he said.