Reacting to the fall of pound and Asian markets after Britain voted to stay out of the European Union, Finance Minister Arun Jaitly said that India is capable of handling the medium term impact of Brexit.
“India is well prepared to deal with short and medium term consequences of Britain exiting the European Union. We are well prepared to deal with short and medium term consequences of Brexit,” FM said in a statement.
Reacting to Brexit, Jaitley said that the verdict of the referendum will add to the volatility in the global markets and countries have to brace themselves for a period of possible turbulence in medium term.
“Our macroeconomic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation,” said the Finance Minister.
Jaitly who is currently in China to attend the first meeting of the Board of Governors of the USD 100-billion Asian Infrastructure Investment Bank (AIIB), said the government, the Reserve Bank of India (RBI) as well as other regulators are “well prepared, and working closely together, to deal with any short term volatility.”
Reserve Bank Governor Raghuram Rajan too reacted on the developments in EU and said that the Central Bank is keeping an eye on all eventualities. Rajan said that Indian economy has good fundamentals, low short-term external debt and sizeable foreign reserves
“RBI watching all markets, including currencies, and will provide liquidity wherever necessary,” said Raghuram Rajan
Soon after the markets opened on Friday morning, heavy selling was seen across all sectors including realty, industrials, metals, auto, banking, finance, capital goods and power, as reports began to come in about Britain voting for exit from EU.