Liquidity concerns to be addressed: Group to look into credit needs - II

Mr Chidambaram said in consultation with RBI and other regulatory authorities, the government will address the liquidity and other concerns about the economy.
The Finance Minister noted that on Wednesday, the Cabinet reviewed the financial situation in India and authorised him to issue a statement on its behalf and the government.
''We have identified that the main problem is liquidity, and we have assured the people that we will respond swiftly and take steps to infuse more liquidity according to the needs of the situation. Reserve Bank of India was advised to take appropriate steps in this regard,'' he said.
Mr Chidambaram drew attention to the statement made by World Bank President Robert Zoellick, that ''India is in a position to weather the global financial turmoil.''
He also draw attention to the statement of Asian Development Bank President H Kuroda, that ''the impact on the financial sector in Asia is limited this time.''
The Finance Minister said credit was the lifeline of trade, commerce and business and, hence, it was important that credit continues to flow to all sectors of the economy.
He said it was important to maintain confidence in the Indian economy.
''As the Cabinet noted on Wednesday, the fundamentals of our economy are strong and there are many indicators which affirm the sound fundamentals,'' he said.
The injection of liquidity by the RBI into the financial system was done due to the global turmoil and domestic developments.
The RBI, which has been steadily tightening monetary policy since 2004, in a bid to control inflation now at 11.80 per cent, has taken a U-turn in view of the rapidly changing global and domestic realities.
The stock markets, on a secular decline for some months now, were on a slide on Friday and this morning, notwithstanding reassuring messages by the Indian government.
The Rupee fell against the dollar to a six year low of 49.07 due to the deepening global financial crisis and foreign fund outflows.
''We are sufficiently strong enough to handle anything,'' Mr Ramanathan quipped.