IMF joins RBI guv, FM to allay fears of slowdown

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New Delhi, Washington, Oct 11:: Even as the economy has started to feel the heat of the shockwaves in the US and Europe, RBI governor D Subbarao on Saturday said deposits in banks are safe and there was no reason for anxiety.

Subbarao, who is in Washington, stressed that the fundamentals of the Indian economy were strong. “Our forex and money markets have been functioning in an orderly manner,” he said.

Meanwhile, giving a shot in the arms of the managers of the economy, the International Monetary Fund (IMF) too on Saturday said that it expected the Indian economy to brave the crisis and grow at a healthy 7% in 2009.

“Overall, we see the Indian economy continuing to perform well,” Oliver Blanchard, economic counselor and director of IMF research department said in Washington. “Like all other countries, India will be affected by the global slowdown. We are projecting that the growth in India will come down from 8% in 2008 to 7% in 2009. But 7% is still a strong rate of growth,” he pointed out.

The statement came despite a dismal show on the markets and rupee front over the week. The sensex on Friday closed at 10,527.85 points, shading 7.1% or 800.51 points, its lowest close since July 2006, while the rupee hit a new low of 49.30 against the dollar.

Rationalising the IMF stand Blanchard said, “India is still largely a closed economy, has strong internal growth dynamics, from rapid productive growth, from its process of integration into the global economy that is still continuing.”

The IMF sentiments were echoed by finance minister P Chidambaram. The finance minister expressed confidence that India can weather the storm of global financial crisis as the country’s economic fundamentals and the banking system are strong.

“We must brace our self and weather the storm. I am confident that the Indian economy is strong and resilient to weather the storm and I would request all players in the economy to cooperate with the government in weathering the storm,” FM said in New Delhi.