Main Problem is liquidity – FM
As the economy is looking anything but bright and this is a global phenomenon, the FM had in a statement said,
We have identified that the main problem is liquidity, and we have assured the people that we will respond swiftly and take steps to infuse more liquidity according to the needs of the situation.
I have received a number of representations from banks, other financial entities/intermediaries, corporates and small businesses that the issue of liquidity must be addressed in a comprehensive manner. They have impressed upon me that intermediation of credit must take place smoothly and efficiently.
I wish to draw attention to the statement made by Mr. Robert Zoellick , President, World Bank that “India is in a position to weather the global financial turmoil.” I also wish to draw attention to the statement of Mr. H. Kuroda, President, ADB that “the impact on the financial sector in Asia is limited this time.
Credit is the lifeline of trade, commerce and business and, hence, it is important that credit continues to flow to all sectors of the economy. In consultation with RBI and other regulatory authorities, Government will address the liquidity and other concerns about the economy.
It is also important to maintain our confidence in the Indian economy. As the Cabinet noted on Wednesday, the fundamentals of our economy are strong and there are many indicators which affirm the sound fundamentals.
Maybe things are not really bad – if the stocks don't fall today.