Modi reviews stock, currency market crash, says problems only external

Indian Prime Minister Narendra Modi has vowed to push ahead with the reforms agenda and increase public spending as part of the drive to strengthen the economy, Union Finance Minister Arun Jaitley was quoted as saying by an Indian newspaper. According to Jaitley, the prime minister, who reviewed the crash and the plunge of the rupee during a meeting with him and other top officials, said the economy was stable and the problem was ‘external and not internal’. Jaitley said Modi also opined that in order to further strengthen Indian economy, there is a need to take more steps. The finance minister said the government is keenly monitoring global developments and it has discussed market situation with RBI and SEBI. He added that India’s internal situation is strong and there is no payment crisis and ruled out any bailout package. On a query when the government will intervene in the market, Jaitley said the Centre will keep watching the situation and respond when required. The Times of India (TOA) reported on Tuesday that the Sensex crashed a record 1,625 points to 25,742, a one-year low level, leaving investors poorer by Rs7 trillion (Rs7 lakh crore or over $100 billion) while the rupee closed at a two-year low of 66.65 to a dollar. The ‘Black Monday’ crash was caused by fears of a deep and long-lasting slowdown in the Chinese economy, the second largest in the world, which accounts for 15 per cent of global GDP and half of all global growth. Foreign funds took a record Rs5,275 crore out of Indian stocks. Each of the 30 Sensex and 50 Nifty constituents closed in the red, a highly unusual event.  The global financial bloodbath started after the Shanghai composite index lost 8pc, proving ineffective a series of steps that the Chinese government and its market regulator had taken in the last few weeks to stem outflow of money from the country. As a result, the Nikkei in Japan and Hang Seng in Hong Kong too crashed over 4.5pc each. Major European markets too opened with over 4pc losses and the Dow Jones dipped over 1,000 points in early trades. Along with stocks, several emerging market currencies competed with each other in their race to the bottom while the dollar and the Japanese yen rallied.
- biplab