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Indian stock markets better off than many others: Shaktikanta

Trying to calm jittery investors, Economic Affairs Secretary Shaktikanta Das on Thursday said that the decline in stock markets in India is not as bad as in some other countries and the government is prepared to deal with challenges emanating from global developments. Attributing the turmoil in stock and currency markets to global developments, he said that the rupee had not declined as steep as currencies of some other countries of the world.

“Over the last few days the NSE and BSE have experienced a lot of volatility. The decline in our markets is comparable to rest of the world... India is not an exception, but it is better off than many other markets,” he said. The benchmark BSE Sensex on Thursday plunged by 807 points.

Das said that since January, Nifty and BSE have witnessed about 10 per cent negative growth “but if you compare with other markets — Japan lost 21 per cent, S&P 500 of US 10.35 per cent, Hong Kong 14 per cent, Singapore 12 per cent, UK 10 per cent and Shanghai 28 per cent.”  He added that amid the global turmoil, 7.6 per cent growth rate for the current fiscal, as projected by the Central Statistics Office (CSO), was not bad although the agriculture sector would continue to remain a challenge.

“The government is keeping a very close watch on international and global development and government is prepared to deal with all these challenges,” he said.  The world over stock markets are going down, Das said, adding that corporates are facing stress and are readjusting their business models. “This is getting reflected in the stock markets.”

There is also some kind of uncertainty with regard to US federal reserve hiking interest rates and its monetary policy outlook which is making some investors move to the US, he added. “The US Fed is also alive to the growing uncertainty, especially about growth revival, not only in the US but world over... I would expect they will be very responsible and take into consideration the world economy as it prevails today and they will definitely be following a very cautious approach in the next policy announcement,” Das said.

As regards the turmoil in currency markets, he said the decline in rupee via-a-vis dollar is not something peculiar to India as many other currencies have witnessed similar movements.

“World over currencies are affected. All currencies are facing depreciation. Rupee direction is not exceptional and we are quite better off than other currencies,” Das said, adding that investors are pulling out and moving to US which is putting pressure on foreign exchange market.

So far this fiscal, the rupee has depreciated 6.5 per cent against the US dollar, which is less than other global currencies. Between April-February, euro has declined 14 per cent against the dollar, while yen has fallen 10 per cent. The UK pound has lost 7 per cent against the dollar.

Das said that the rupee in respect of other currencies like Euro and Yen has appreciated 9 per cent and 4 per cent respectively.

small savings rate change in a day or two
The Union Government will revise interest rates for small savings schemes in a day or two so as to align them with market rates, but keep them unchanged for the girl child and senior citizens, Economic Affairs Secretary Shaktikanta Das said on Thursday. “The decisions have been taken and executive order and notification would be issued in a day or two. Broadly the underlying philosophy of small savings rate changes is to make the rate more frequently market aligned, make it as closely market aligned as possible,” he said. Small savings rates are linked to Government Securities’ and readjusted every year, he said, adding that now they will be a adjusted on quarterly basis. 
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