Economic Affairs Secretary Shaktikanta Das said that government was prepared to deal with the challenges and stressed that 7.6 per cent GDP growth projected by the CSO for the current fiscal was "noteworthy and very significant".
Trying to soothe the nerves of jittery investors, Finance Ministry on Thursday said the Indian economy is doing well and the performance of domestic stock markets is not as bad as that of other nations.
Attributing the plunge in the stock markets to global factors, Economic Affairs Secretary Shaktikanta Das said that government was prepared to deal with the challenges and stressed that 7.6 per cent GDP growth projected by the CSO for the current fiscal was "noteworthy and very significant".
"Over the last few days the NSE and BSE have experienced a lot of volatility. The decline in our markets is comparable to rest of the world... India is not an exception, but it is better off than many other markets," he said.
His comments failed however to calm the stock markets which posted huge losses during the course of the day.
The benchmark BSE Sensex plunged over 807 points on sustained selling by funds and retail investors amid weak Asian cues. The 30-share index closed 3.40 per cent down at 22,951.83 points. Similar losses were witnessed in the NSE Nifty.
Das on his part assured the investors that "government is keeping a very close watch on international and global development and government is prepared to deal with all these challenges".
He further said that government would revise the interest rates for small savings schemes in a day or two to align them with the market rates. The interest rates on girl child and senior citizen schemes, however, will not be revised.
The interest rates on small savings schemes will now be revised every quarter instead of annually, he added.
Das said that since January, Nifty and BSE have witnessed about 10 per cent decline (since February 10, 2016) "but if you compare with other markets – Japan lost 21 per cent, S&P 500 of US 10.35 per cent, Hong Kong 14 per cent, Singapore 12 per cent, UK 10 per cent and Shanghai 28 per cent."
He added that amid the global turmoil, 7.6 per cent growth rate for the current fiscal was not bad although the agriculture sector would continue to remain a challenge.
"Given this kind of volatility and turmoil prevailing all over the world in the global economy, the growth forecast for the current year at 7.6 per cent is definitely noteworthy and very significant," he added.
The growth projection, he said, was reflective of the fact that "India is able to hold on to growth, which one can call robust under the current circumstances".
As regards the turmoil in currency markets, he said the decline in rupee via-a-vis dollar is not something peculiar to India as many other currencies have witnessed similar movements.
"World over currencies are affected. All currencies are facing depreciation. Rupee direction is not exceptional and we are quite better off than other currencies," Das said, adding that investors are pulling out and moving to US which is putting pressure on foreign exchange market.
So far this fiscal, the rupee has depreciated 6.5 per cent against the US dollar, which is less than other global currencies. Between April-February, euro has declined 14 per cent against the dollar, while yen has fallen 10 per cent.
The UK pound has lost 7 per cent against the dollar. Das said the rupee in respect of other currencies like euro and yen has appreciated 9 per cent and 4 per cent respectively.
The rupee was trading at 68.14 to a dollar, down 0.29 paise over yesterday's close, in the afternoon.
Das further said that was also some kind of uncertainty with regard to US federal reserve hiking interest rates and its monetary policy outlook which is making some investors move to the US.
"The US Fed is also alive to the growing uncertainty, especially about growth revival, not only in the US but world over... I would expect they will be very responsible and take into consideration the world economy as it prevails today and they will definitely be following a very cautious approach in the next policy announcement," Das said.
