Your money is safe, prime minister assures citizensOctober 20th, 2008 - 6:30 pm ICT by IANS
New Delhi, Oct 20 (IANS) In a bid to calm nerves on account of the global financial tsunami, Prime Minister Manmohan Singh Monday said the crisis had slowed the country’s growth but sought to reassure citizens that their money in banks was safe and that steps were being taken to minimise the adverse impact of the downturn on the economy.“There is no place for fear,” the prime minister told the Lok Sabha, the lower house of parliament, in a brief statement. “This is the time for resolute action,” he added, while listing the measures taken over the past fortnight by both his government and the central bank to address the liquidity problem in the country.
“I assure depositors that their money is safe,” he said, but added: “We must be prepared for a temporary slowdown in the Indian economy.”
The prime minister said the estimates of India’s growth were said to be in the region of 7.5 percent and even by the most pessimistic standards, it was no less than seven percent, which was not low by any global standard.
“We hope to minimise the negative impact of the crisis and, once it is settled, to restore the nine percent trajectory,” he said.
Manmohan Singh, who was has served as the governor of India’s central bank and the finance minister, said the Indian banking system also remained insulated and well capitalised to overcome any adverse impact.
“Indian banking system is not exposed to mortgage lending crisis in the US. Our banks, both in the private and public sector, have stable capital adequacy. The banks are being encouraged to provide liquidity to ensure that there are no disruptions in economic activity.”
According to the prime minister, the steps taken so far include Rs.25,000 crore (Rs.250 billion, or $5.5 billion) given to banks against their waiver of loans to farmers in distress, so that they can lend to the corporate sector.
He also said that steps taken by the central bank, like the cut in a key lending rate by 100 basis points Monday, will have a beneficial effect. He also said inflation had declined in recent weeks and the movement showed a clear deceleration.
“We are optimistic that there will be a further reduction in WPI (wholesale price index) in the next two months.”
The prime minister said the crisis, which was being referred to as the worst crisis since the Great Depression in the 1930s, has not exposed the Indian banking system to it directly.
Tracing the roots of the global crisis, the prime minister said it had started with the housing mortgage industry in the US and spread to the money and stock markets, but added that the Indian financial system was not directly exposed to it.
“The financial storm has shaken confidence in the system and precipitated a steep decline in stock markets,” he said.
“India, like other countries, is experiencing its ripple effects,” he said and added that some countries like the US were taking unconventional steps to avert the crisis, which was having a positive effect globally.
The prime minister’s remarks came against the backdrop of a key Indian stock market index falling nearly 25 percent in the past month and over 45 percent in the past year, even as the rupee fell to its lowest level against the dollar in six years.
This apart, the growth of industrial production at 1.3 percent in August is the lowest in a decade, while inflation has continued to rule at double-digit levels.