Amid fear of global slowdown and its impact on the world economy, the Reserve Bank of India (RBI) has said that Indian financial market is not vulnerable to overseas development. "The money government securities and foreign exchange markets, have been stable in India and, in our view, they may not be vulnerable in terms of direct and first-round effects (of global slowdown)," Reserve Bank of India (RBI) Governor YV Reddy said at the World Leaders Forum here yesterday.
He further said, "in our assessment, the Indian financial sector is likely to be less affected by the contagion than most other emerging market economy (EMEs), in respect of first-round or direct effects." However, he added, the Indian equity markets, have been volatile in the recent months and that has some impact on changing sentiments.
Referring to the current turbulence in the market, he said, India has not been contributing in the global macro economic imbalances, "though it has a stake in how the issues get resolved in the near future." Further, making a case for sovereign wealth funds (SWFs), the government-owned investment vehicles, he said, India, which is receiving lot of investment in form of SWFs, "is interested in the current debate". Although, he added, the huge forex reserves of $300 billion were being managed by the apex bank of the country as per the IMF guidelines.
Pointing out the state of the economy of the country, Reddy said India has "benign inflationary conditions averaging around 5.2 per cent since 2004-05. "However, presently both the domestic output and prices were under pressure due to recent global developments in the prices of food, fuel and metals, and the turbulence in the financial markets, he said. He added India has witnessed annual average real GDP growth of over 8.7 per cent in last four years