Govt to form special group to deal with global crisis

The Finance Ministry today decided to set up a Crisis Management Group (CMG) to deal with the impact of the global problems on the domestic economy, especially on the financial sector.

The decision to set up a CMG was taken at a meeting headed by R Gopalan, Secretary Department of Economic Affairs (DEA) in the Finance Ministry.

"The group will work towards developing an early warning mechanism to avert a crisis," a senior Finance Ministry official said, adding it would also include experts.

Among others the meeting was attended by Chief Economic Advisor Kaushik Basu, Financial Services Secretary DK Mittal and Disinvestment Secretary Mohammad Haleem Khan.

The idea to set up a small group comprising representatives of different regulators to deal with the crisis was mooted by the Reserve Bank of India.

The RBI had pitched for "a closely knit nimble footed CMG with representations from the regulatory bodies, namely, RBI, Sebi [Securities and Exchange Board of India], Irda [Insurance Regulatory and Development Authority], PFRDA [Pension Fund Regulatory and Development Authority] and the Government of India, Ministry of Finance".

The group, which will be a part of the Financial Stability and Development Council (FSDC), according to sources, will be headed by Secretary, DEA.

The group, the official said, would be on the lines of the Financial Stability Oversight Council (FSOC) which was set up by the US administration to identify threats and responding to emerging risks to ensure  stability of the financial system.