In­dia's econ­omy can with­stand China rip­ple ef­fects: RBI

The Pak Banker - - 6BUSINESS -

MUM­BAI: The re­form agenda taken by the In­dia's gov­ern­ment and RBI is pro­gress­ing in the right di­rec­tion, says RBI Deputy Gover­nor S.S. Mun­dra.

A day af­ter the big­gest-ever plunge in mar­kets, Re­serve Bank of In­dia Deputy Gover­nor S S Mun­dra sought to al­lay fears say­ing the prob­lems are tran­sient, driven by in­ter­con­nect­ed­ness of the world economies and that In­dia is ca­pa­ble of deal­ing with any kind of ex­ter­nal shocks.

"From the view point of where we were two years ago and where we are to­day, whether it is the level of our for­eign ex­change re­serves or the cur­rent ac­count deficit po­si­tion, and go­ing for­ward how com­modi­ties pric­ing sit­u­a­tion is look­ing at, I would be­lieve that in medium to long-term, we are on the right path," Mun­dra told re­porters on the side­lines of the na­tional bankers meet Fibac here.

The re­form agenda taken by the gov­ern­ment and RBI is pro­gress­ing in the right di­rec­tion, he said.

He fur­ther tried to as­suage the mar­ket wounds say­ing "we have al­ways been telling that we are at a stage where we can­not be dis­con­nected from the global events. We are an in­ter­con­nected mar­ket and there would be oc­ca­sions when these kinds of things will hap­pen, but I think the so­lu­tion is the right mix of the medium and long term poli­cies."

Ad­dress­ing the same event yesterday, and amid the blood­bath in stock and cur­rency mar­kets, Re­serve Bank Gover­nor Raghu­ram Ra­jan said the coun­try has strong macroe­co­nomic fun­da­men­tals and suf­fi­cient forex re­serves to con­tain volatil­ity while he also hinted at a rate cut if in­fla­tion re­mains low. "I just want to in­di­cate that we have plenty of re­serves which was USD 355 bil­lion (at the last count), plus USD 25 bil­lion that ex­ist be­cause some of our for­ward sales.

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