Finance Minister Pranab Mukherjee on Monday said India is in a better position than other countries to manage the impact of an uncertain global economic situation following the developments in the United States and the euro zone.
Mukherjee said the recent developments have fuelled uncertainties in the global markets and they would also have some fall out, albeit limited, on the Indian economy.
"These developments could have some impact on India but as India's growth story is intact and it's fundamental strong, we are in a better position than many other nations to manage this challenge. There could be some impact on the capital and trade flow. But as India's growth story is strong we could see FII seeing India as an attractive investment destination," said Mukherjee.
His comments helped the main stock index pare losses to 0.7 percent after sliding more than three percent in early trade in more than a year after Standard and Poor's downgraded the U.S. sovereign debt rating, triggering a flight from risky assets in regional stock markets.
The Reserve Bank of India (RBI) said on Monday it would ensure adequate rupee and forex liquidity, in a move to calm the markets.
"I would like to repeat that our economic fundamentals are sound and we would also focus on encouraging greater domestic consumption and give impetus to the diverse of the domestic growth. The government will fast track the implementation of pending reform and keep a close eye on international developments," Mukherjee added.
Mukherjee also said the softening of the international commodity price especially of the fuel oil would help take inflationary pressures in the economy, as well as in maintaining the fiscal balance for the year 2011-12
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