Jaitley says govt prepared to deal with short-term volatility

Finance Minister Arun Jaitley on Friday sought to calm the markets which went into tailspin following UK's eminent exit from the European Union, saying that government and RBI are well prepared to deal with any short-term volatility in the forex markets.

The government he said is strongly committed to macroeconomic framework with rock solid commitment to fiscal discipline. He said the government will steadfastly pursue reforms in the medium term, including introduction of GST that will help the country realise its medium-term growth potential of 8-9%.  

Jaitley said in this globalised world, volatility and uncertainty are the new norms. This verdict will, obviously, further contribute to such volatility not least because its full implications for the UK, Europe and the rest of the world are still uncertain. 

All countries around the world will have to brace themselves for a period of possible turbulence while being watchful about, and alert to, the referendum’s medium-term impacts.

As regards the Indian economy, the finance minister said that India is well prepared to deal with the short and medium-term consequences of Brexit. 

"We are strongly committed to our macro-economic framework with its focus on maintaining stability. Our macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline and declining inflation. Our immediate and medium-term firewalls are solid too in the form of a healthy reserve position," the finance minister said.

As investors look around the world for safe havens in these turbulent times, India stands out both in terms of stability and growth. He said India is among the fastest-growing major economies in the world today and its growth and inflation prospects are further improving in the wake of the good monsoons that are now moving well across India.

"The government and the Reserve Bank of India as well as other regulators are well prepared and working closely together to deal with any short-term volatility," the minister said. 

He said the government's aim will be to smooth this volatility and minimise its impact on the economy in the short term. At the same time, for the medium term, it will steadfastly pursue the ambitious reforms agenda — including early passage of the GST — that will help India realise its medium-term growth potential of 8-9%.