Indian Finance Minister Asks Investors To Have Faith & Not Panic

Indian Finance Minister Arun Jaitley has asked investors to have faith in the strength of the Indian economy and not be affected by the negative impact of global markets.

This request came after India’s stock market crashed by over 800 points in a single day and caused a lot for panic amongst investors.

He also said that the government was taking steps to empower public banks to recover loans in order to tackle the issue of increasing non-performing assets (NPAs) in public sector banks.

In a statement, Arun Jaitley Finance Minister said,

It would be a part of prudent investment reaction that the inherent strength of Indian economy is kept in mind by investors, rather than react disproportionately to what the global developments are.

India’s stock market, the Sensex fell by over seven percent last week, its making it the worst slide in almost six years. The rupee also dropped to Rs. 68.30 against the US dollar. Speaking to reporters, Jaitley said that the sell-off in India has been triggered as a chain-reaction to the sell-offs in global markets. He has attributed it largely to external reasons such as the uncertainty in United States’ Fed rate and the anticipated slowing of the Chinese economy.

The finance minister stated that while these issues posed concerns for the global economy, it had to be handled and sorted out by the United States and China.

According to Jaitley, there is no need for any panic in India because India’s economy is still maintaining a growth of 7.5 percent despite the global slump. He said that both manufacturing and services sectors in the country were recovering and would be strengthened with the advent of the monsoon.

Responding to concerns that crippling non-performing assets (NPAs) were threatening the health of India’s public banks, he said that the banks are equipped to deal with these problems. The government is considering measures to permit banks to take action to help them recover the monies, including a review of the bankruptcy law.

The amount of gross NPAs held by 39 listed public sector banks climbed 29 percent in the last quarter, reaching Rs.4.38 trillion in December 2015 from Rs. 3.4 trillion reported at the end of September last year.

Jaitley also took the opportunity to reiterate the government’s commitment to recapitalize these banks, saying that they had an important role to play in the country’s economy. A plan to infuse Rs. 70,000 crore into state-owned banks over a period of four years was introduced by the government in 2015, to ensure that these banks meet the Basel III norms for risk.

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