As the stock markets bounced back after a day of bloodbath, the government today said India is well positioned to get through the global financial crisis and is seizing on it as an opportunity to ensure it becomes the fastest growing large economy in the world.
Minister of State for Finance Jayant Sinha said the weakening of the Indian rupee against the US dollar was a market response to China devaluing its yuan to ensure that Indian business remains competitive.
“We have this period of adjustment and re-adjustment which we are going through and that will naturally create some turbulence in the market. Thankfully, we in India are well positioned to get through this turbulence,” he told NDTV.
The BSE benchmark Sensex, which had tanked over 1,600 points yesterday, recovered grounds today and ended 291 points higher at 26,032.
India’s macro-economic fundamentals are very strong and the economy was recovering nicely.
“Our people are very appreciative of our reforms agenda. So we look very well positioned. As Prime Minister and Finance Minister both of them have said this is really a good opportunity for us in India to take advantage of this turbulence and really ensure that we are positioned as the world’s fastest growing large economy,” he said.
On the meltdown in China, he said there was a sense that China wants its currency Yuan to become one of the world’s global reserve currency.
“They want it to basically to be more market determined than it is right now and that is what is essentially that they have been saying as a reason for their devaluation.
“Those factors are definitely at play but the reality is when the Yuan comes down and it becomes more market determined, it is going to affect the Indian currency as well,” he said.
Sinha said the pricing of Indian rupee relative to other currencies was a function of inflation differentials across markets and GDP growth as well as the productivity improvements in the underlying Indian economy.
“Obviously if our competitors China and other countries are seeing a situation where their currencies are declining in value relative to the US dollar, then in terms of competitiveness we have to follow suit to some extent and the market would enable that to happen as well so that the rupee becomes more competitive,” he said.
He said it was “India’s moment and I think we are seizing the moment.”
The Minister criticised Congress for obstructing passage of key reform measure like Goods and Services Tax (GST) saying the country could have done better in capturing the moment.
“If we did not have the mindless negativity of the Congress and we had GST passed by now we could have had done even better in terms of capturing this moment than being well positioned. We are still very hopeful of that. We keep trying our level best to make that to happen,” he said.
Asked if a special session of Parliament was an option to get the GST bill through, he said all possible alternatives are being explored.
“The fact that we have Parliament sine die adjourned as opposed to prorogue ensures that alternative is still on the table,” he said terming as “truly tragic” the Congress’ obstructing a bill that they themselves had introduced in 2006.