Finance Minister Pranab Mukherjee on Friday said he would not press the panic button due to high capital inflows, including an over USD 38 billion by FII’s till November, though a higher level could be a constrain for the economy to absorb.
“We have the capacity to absorb these levels (of capital inflows). If this goes beyond a point, definitely that would be a matter of concern but that may be in a near future but not right now and therefore I am not pressing a panic button right now,” he said.
Mr. Mukherjee who was speaking at the Annual General Meeting of industry body PHD said he is not unduly perturbed about the FIIs inflows while FDI inflows have moderated.
Overseas funds have infused a staggering $4.78 billion in the capital market in November, taking the total to $38.5 billion in the 11 months of 2010.
FDI during January-October stood at $ 17.37 billion, down 27 per cent from $ 23.8 billion during the corresponding period of previous year.
The Finance Minister exuded confidence that government’s fiscal policy and RBI’s monetary actions are in tandem and will help the economy recover and than achieve higher growth trajectory.
RBI’s actions to inject liquidity in the economy while refraining from hiking policy rates shows that the central bank is fully aware of the inflationary pressures but is also mindful of the requirements for higher growth.
