NEW DELHI: As Britain’s decision to leave the EU caused currency volatility and rattled financial markets, top government officials tried to soothe frayed nerves. Finance Minister Arun Jaitley said India was well prepared to deal with the short and medium-term consequences of Brexit as the country’s macro-economic fundamentals were sound
Jaitley, who began his five-day China visit Thursday, said India had “a rock-solid commitment to fiscal discipline. Our immediate and medium-term firewalls are solid too in the form of a healthy reserve position.” The referendum verdict will add to the volatility in global markets and all countries would have to brace for a period of possible turbulenc, he added. Jaitley, who is attending the first meeting of the Board of Governors of the
$100-bn Asian Infrastructure Investment Bank, said the government, the RBI as well as other regulators were “well prepared, and working closely together, to deal with any short-term volatility.”
He said the government in the medium term will“steadfastly” pursue an ambitious reform agenda including early passage of the GST bill that will help realise medium-term growth of 8-9 per cent.
“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. The finance ministry is in touch with the RBI and Sebi to intervene in case of currency volatility and market fall-outs. Shaktikanta Das, economic affairs secretary said, “We are in constant touch with RBI and SEBI. Definitely, we are seeing a reaction on currencies. Since these are sentiment-impacted, weakening has already started. We have the firepower to deal with the situation but we have to spend them judiciously.” Das further added that the government had discussed the nature and type of interventions with the regulators, who have been asked to work keeping in mind market trends and currency movements. Chief Economic Advisor Arvind Subramanian said, “The UK referendum has come as a bit of a surprise. We are in a period of global uncertainty. India proves to be haven of stability in these turbulent times.” Asked what would be the Brexit impact on India, he said it was difficult to quantify.
Commerce and Industry Minister Nirmala Sitharaman, meanwhile, said, “I would think, they (EU) would need time now to assimilate this outcome. Once they assimilate the outcome, they will only then respond. I will talk to my counterparts.”
Commerce secretary Rita Teaotia said, “We do not have any bilateral trade agreement with EU, but since we trade bilaterally with various countries we do not see any direct impact on our trade with the UK.”