Stock Market

New Delhi: Feeling the heat of the fast- spreading global financial meltdown, the Union Cabinet today promised to 'respond swiftly' to the enveloping crisis and infuse more liquidity if needed. Prime Minister Manmohan Singh convened a special meeting of the Cabinet as central banks in the US, UK, Canada and Europe moved in tandem to cut interest rates and beat back the crisis. Finance Minister P Chidambaram came out mid-way to give a statement on behalf of the government "to assure the people that the economy has the capacity and resilience to weather the storm that is blowing across the world".

Against the backdrop of financial giants collapsing in the West, the Finance Minister said, "Our banks have strong balance sheets. They are well capitalised. The capital adequacy ratio of each of our banks is well above Basel norms and above the norms stipulated by the RBI.

"Besides, they are well regulated, and this has been universally acknowledged. Our banks have shown great resilience and continue to provide credit to all sectors of the economy. No one need have any fear about the soundness of India's banking system." The special cabinet meeting came on a day when the stock market witnessed a steep intra-day fall of about 1000 points spreading panic among investors.

"We are conscious of the fact that liquidity conditions in India too have tightened in the last few weeks. Our authorities have responded to the situation. The RBI has taken steps to infuse more liquidity into the market. "We will watch the situation carefully and continuously, and respond swiftly to the needs of the market. Steps will be taken to infuse more liquidity, if required," Chidambaram said.

He said, "We have enough instruments to ensure the stability of the Indian financial system and we will continue to provide credit and other support for the growth of Indian economy." Replying to queries, the Minister said, "Inflation control is still a very high priority. There is equally important priority of maintaining stability of the Indian financial system. Keeping both priorities in mind, we will take steps." (PTI)