NEW DELHI (AFP) — India's finance minister Wednesday insisted the country's economy and stock market were sound in a bid to reassure nervous investors worried about the fallout from the global financial crisis.
Finance Minister P. Chidambaram said the volatility of Mumbai's Sensex index, which fell more than eight percent by midday, reflected only the state of investor sentiment, not the underpinnings of the economy.
"The fundamentals of India's economy are strong," said Chidambaram, interrupting a cabinet meeting to make a statement to reporters.
"The balance in the stock market will be restored over time as sentiment is restored."
Stocks rose in the afternoon but the Sensex still ended down 3.14 percent at its lowest close in more than two years.
The finance minister also said Indian banks were not at risk from the worst global financial crisis in decades, which has hit hard at US and European institutions.
"No one need have any fear about the soundness of the Indian banking system," he said, adding, "We will watch the situation carefully and continuously and respond swiftly. Steps will be taken to infuse more liquidity if required."
Other finance ministers across Asia also tried to assure their populations Wednesday that their nations were not being buffeted by the credit crunch and banking crisis set off by defaults on risky subprime housing mortgages in the United States.
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