India prepared for global financial threats: FSDC

New Delhi, July 5: India will continue to be in a state of preparedness for managing any external sector vulnerabilities, including those emerging from Brexit and its consequences, the Financial Stability and Development Council (FSDC) said on Tuesday.

The council, headed by finance minister Arun Jaitley, noted that uncertainty in global economy and high volatility in the financial markets are prominent risks confronting the emerging market economies.

Rating agency Moody’s on Tuesday said the impact of the UK’s majority vote to leave the European Union (EU) on India’s financial markets would be limited because exports to the UK and the rest of the EU account for 0.4% and 1.7% of India’s GDP, respectively.

India appears to be much better placed on the back of improvement in its macro-economic fundamentals, recent financial sector reforms by the government and large forex reserves, which provides cushion against financial market volatility, FSDC noted.“With the revival of sentiment and certain signs of pickup in industrial activity, a good monsoon is expected to further strengthen growth in India,” the finance ministry said in a statement. Among other issues, the council deliberated on the issue of rising banknon-performing assets(NPAs)and the measures taken by the government as well as the RBI for handling the stressed assets and discussed the way forward to manage the situation.?

Besides minister of state for finance Jayant Sinha, the meeting was attended by Reserve Bank of India (RBI) governor Raghuram Rajan, economic affairs secretary Shaktikanta Das, finance secretary Ashok Lavasa, chief economic adviser Arvind Subramanian and other financial sector regulators.

Addressing the council, Jaitley said the major challenges before the government include strategy to improve the overall performance of public sector banks to make stalled projects functional and economically viable and to increase private sector investment, among others. “Due to better spread of monsoon, we are expecting higher production of pulses this year compared to previous years which in turn will substantially ease their prices in the market,” Jaitley said.