India's economy moving in positive direction: Pranab Mukherjee

Finance Minister Pranab Mukherjee Reuters

With all eyes on the global situation, Finance Minister Pranab Mukherjee today said India's macro-economy was moving in a positive direction and hoped international commodity prices would decline, helping the government tame inflation and cut subsidies.

Mukherjee maintained that India's economic fundamentals were strong and capable of meeting any challenge posed by the downgrade of the US economy and the crisis in some eurozone nations.

"I would like to emphasis that some of the investment banks have upgraded India to market weight, that means the basic fundamentals are strong and macroeconomy recovery is moving toward a positive direction," he told reporters, referring to yesterday's Goldman Sachs report.

The minister said the US downgrade has created some problems for India, but the country could handle any situation arising out of international developments.

"The challenge is there, but we have the capabilities of facing these challenges," Mukherjee said. "... Collectively, with the efforts of all concerned, particularly with the cooperation of the RBI, we will be able to face the challenges," he added.

Expressing happiness over the quick recovery shown by the Indian stock market, which was much better than other Asian countries, he said, however, it was too early to say how the markets would behave in future.

The downgrade of the US economy by Standard and Poor's last week has created havoc in stock markets worldwide, but led to a decline in commodity prices, including crude oil.

Talking about the decline in crude prices, Mukherjee said he was not fully satisfied with the downward movement from $107 per barrel to $102 per barrel, as it is still "reasonably high".

Mukherjee hoped that prices of oil and other commodities will come down further, "which will help us to manage inflation and also help in reducing subsidy on oil".

Referring to the movements in the Indian stock market today, Mukherjee said "it has recovered from the loss in the morning... if you compare it with Asian markets... the average going down of various Asian markets are varying from 2-4 per cent."

The BSE benchmark Sensex plunged deep into the red today after suffering an early morning loss of 558 points, but staged a smart recovery to regain the 17,000 points level by early afternoon.