Seeking to allay fears about potential impact of Britain-EU divorce on Indian economy, Union Finance Minister Arun Jaitley on Friday said India is well-prepared to deal with the short and medium-term consequences of the Brexit and has solid immediate and medium-term firewalls in form of healthy forex reserves.
“Our macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation. Our immediate and medium-term firewalls are solid too in the form of a healthy reserve position,” Jaitley said in a statement.
The Finance Minister, who was on a five-day tour to China to attend the first meeting of the Board of Governors of the $100-billion Asian Infrastructure Investment Bank (AIIB), said that the Government, the Reserve Bank of India (RBI) as well as other financial regulators are well prepared, and working closely together, to deal with any short term volatility.
“Our aim will be to smooth this volatility and minimise its impact on the economy in the short term,” he said.
“The Government in the medium term will steadfastly pursue ambitious reform agenda including early passage of the GST Bill that will help realise medium term growth potential of 8-9 per cent,” he added.
Jaitley, however, said all countries around the world will have to brace themselves up for a period of possible turbulence while being watchful about, and alert to, its medium term impacts.
For India, he said, the Government is strongly committed to macroeconomic framework with its focus on maintaining stability.
Stating that India is among the fastest growing major economies in the world today, he said, “Our growth and inflation prospects are further improving in the wake of the good monsoons that are now moving well across India.”
On the final vote of the people of the United Kingdom on whether to remain or leave the European Union, Jaitley said India respects the referendum’s verdict. “We are also aware of its significance in the days ahead and also for the medium term,” he added.
“As I have often said, in this globalised world volatility and uncertainty are the new norms. This verdict will obviously further contribute to such volatility not least because its full implications for the UK, Europe and the rest of the world are still uncertain,” said Jaitley.