A day after the U.S. Fed decided to maintain status quo on its stimulus programme, the Finance Ministry said it is business as usual for India and asserted that the government would continue with reforms.
“We should not overly put emphasis on the decisions of the Fed in the manner in which the economy will unfold...It is business as usual for us, as far as we are concerned,” Economic Affairs Secretary Arvind Mayaram told reporters in New Delhi.
The U.S. Federal Reserve on Wednesday surprised the markets by saying it will continue with its monthly $85 billion bond buying programme and wait for more evidence of growth recovery. Expectations that the stimulus programme would be tapered had led to fears of capital outflows, causing the rupee to depreciate against the dollar and stocks to fall.
“I think we will need to continue to deepen our own reform process so that we continue to strengthen the economy. We believe with the steps that the government has taken, the economy will continue to show signs of growth and that is what is going to strengthen the rupee and strengthen the markets,” Mr. Mayaram said.
The government has taken steps to revive investments and promote exports and manufacturing as it battles slowing economic growth and seeks to contain the fiscal and current account deficits.
To attract dollars and stem the rupee’s decline, the RBI opened a currency swap window for oil refiners and a special concessional window to swap foreign currency non-resident (FCNR) deposits.
Stocks and the rupee shot up after the U.S. Fed decision.
The S&P BSE Sensex rose as much as 605 points, or 3.03 per cent, to 20,567.61, while the rupee jumped 158 paise to a one-month high of 61.80 against the dollar.
“I think as far as we are concerned, we would have thought it would have been good if there was some kind of policy guidance (from the Fed) so that there was certainty as to how the taper will happen, but nevertheless we believe what we are doing is right,” Mr. Mayaram said.
Commenting on the Fed’s decision to delay the tapering of the bond-buying programme, Financial Services Secretary Rajiv Takru said the markets have given sufficient indication about how they have perceived the move.
“...we have to plan in our interests. And we were ready for any kind of a decision which was taken. So we are happy, I think we were ready for both,” he added.
On the rupee, Mr. Takru said, the domestic currency “has to follow the market diktats...I think it is still a little undervalued.”