Talking the market to normalcy and hoping for a further softening in global commodity prices, Finance Minister Pranab Mukherjee on Tuesday reiterated that the country's macro-economy was on the right path and a decline in prices, particularly of crude oil, would help the government in containing inflation and pruning the subsidy burden.
India's economic fundamentals, Mr. Mukherjee maintained, were strong and, therefore, capable of meeting any challenge posed by the United States rating and Euro zone crisis. Referring to Goldman Sachs' report on upgrading India to buttress his point, he said: “I would like to emphasise that some of the investment banks have upgraded India to market weight, that means the basic fundamentals are strong and macro-economy recovery is moving toward a positive direction.”
Mr. Mukherjee conceded that the U.S. downgrade had created some concerns for India, but the problems arising out of the international developments could be tackled. “The challenge is there, but we have the capabilities of facing these challenges... Collectively, with the efforts of all concerned, particularly with the cooperation of the RBI, we will be able to face the challenges,” he said.
Happy over the quick recovery witnessed in the India bourses as compared to other Asian markets, Mr. Mukherjee, however, felt that it was too early to comment on it as a downtrend. On the decline in crude oil prices following the U.S. rating downgrade and the consequent global turmoil, Mr. Mukherjee said that he was not fully satisfied with the fall from $107 a barrel to $102 a barrel as it was still “reasonably high.”
Mr. Mukherjee, however, hoped oil and other commodity prices would decline further “which will help us to manage inflation and also help in reducing subsidy on oil.”