Thaindian News

New Delhi, Aug 6 (IANS) In the backdrop of a global meltdown of stock markets, which also rocked Dalal Street, and a ratings downgrade of US, Finance Minister Pranab Mukherjee Saturday said despite such crises, the Indian economy remained strong.

“There are difficulties and some sort of a crisis. But there is no need to press the panic button. I do not want to worry unnecessarily,” he said at a lecture hosted by the Confederation of Indian Industry (CII).

“Our (Indian) growth story is intact and our fundamentals are strong. The markets have shown that they can withstand external pressures,” the finance minister added at the lecture on 20 years of reforms in India

Friday had seen a key index of Indian equities market dip 700 points in the intra-day amid mayhem globally, followed by a ratings downgrade of the US economy by Standard and Poor’s (SAP) for the first time in its history.

The international credit rating agency late-Friday night downgraded the top notch AAA credit rating of the US government’s ability to pay back its creditors and investors to AA+.

The US treasury bond has traditionally been considered as one of the safest avenues for investments. World over, governments and central banks have invested heavily in these treasury bonds.

Speaking to IANS after the lecture, leading industrialists said that as of now no real impact has been felt in the Indian market and that investor sentiment will remain positive for India, as one of the best destinations for investment.

“Our economy and fundamentals are strong and no real impact has been felt,” said Hero Group managing director and CEO Pawan Munjal, adding that the only impact the downgrade may have would be on the US treasury bonds and ability of the US to raise money.

“They (US) may have to print more notes. This may fuel inflation in the US and other economies as well,” he said.

Munjal’s views were corroborated by fellow industrialist, Jubilant Organosys co-chairman and managing director Hari Bhartia, said that Indian economy remains strong as the consumer growth is robust in the country and investors won’t be deterred in coming to India.

“The consumer growth story in India is not over. We are an investment favourites,” Bhartia told IANS.

The government should take some pro-active steps to help the industry to grow by bring in reforms and removing infrastructure bottlenecks, he added.

Earlier in the day, Mukherjee expressed concern over downgrading of the US government credit rating and said the situation will be monitored closely.

“The situation is grave. We will have to analyse it and it will take sometime to do that,” he told reporters on the sidelines of an event here.

Mukherjee Friday tried to calm the domestic investors’ sentiment by blaming the volatility in the market on external factors.

“Stock markets fell due to global factors like weak recovery in US and spread of debt burden in Eurozone,” he said.

“Current volatility is temporary,” he added.