Speaking in the parliament P.M. Manmohan singh said "India like other developing economies is feeling the ripple effect of the crisis. Several financial institutions are in trouble and on the brink of solvency."
He also reacting to the steps taken by RBI "Number of unconventional steps are being taken by the government to stem the tide, which is causing a steep decline in the stock markets. It is the worst crisis since the Great Depression and we have taken a number of steps to minimize the impact,"
The Prime Minister, however, assured that all the bank deposits are safe.
He also assured the investors that India has a financially sound system so no fear should be there.
"We are taking steps to combat the liquidity crisis. The RBI has released Rs 25,000 cr for the banking sector. It has also cut 100 basis points in the repo rate to minimize the effect," he said.
Prime minister that the global meltdown will have an indirect impact on the Indian economy which will lead to the temporary slowdown in the Indian growth curve.
The PM also said that India's growth could come down to 7 per cent.
The ripple effect as said by the prime minister has spread like a wild fire with the majority of the industries like I.T., aviation, manufacturing ( alarming IIP of 1.3% ) showing signs of significant slowdown.
The consumers are very vary at the moment because of the double digit inflation and the liquidity crisis hitting the middle class in the form of salary cut and job losses. An increase in home and car loan interests have meant that many middle income families have to cut their festival budgets.
Marketers can expect the sales for the coming festival season the be down if the present crisis worsens.
Nandan Nilekani CEO of Infosys said that the companies can handle the crisis by using strategy.
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