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US tragedy not to have immediate impact on India: Sinha

Our Bureau

MUMBAI, Sept. 12

THE Finance Minister, Mr Yashwant Sinha, expects no immediate direct impact of the US tragedy on the Indian economy, particularly on the rupee and the oil import bill.

``What has happened is very unfortunate and a great tragedy for the US, and the entire world in a way. But as far the economic scene in India is concerned, I see no reason for panic,'' Mr Sinha told newspersons a little before he addressed the Indian Ban ks Association here.

``I see no reason for the rupee to be impacted. As far as oil import is concerned, we have long-term contracts,'' the Minister said. ``There shouldn't be any direct immediate impact on the economy. The most important thing is to keep faith in ourselves a nd not have a panic reaction.''

On the possible rise in oil prices, Mr Sinha said: ``We have long-term contracts on oil import. However, a lot of things have to be clarified. I don't see any immediate impact on our oil import bill. Prices have risen yesterday and today the world over, but things have to stabilise very soon.''

Mr Sinha said Indian exports had been affected by the global slowdown. The US will take all the necessary steps to return to normalcy as fast as possible.

He said the stock markets had been affected as an immediate reaction. ``The rupee responds on a daily basis to demand and supply; its value will be determined by these movements. There is not much cause for concern as the Government has adequate foreign currency reserves for support,'' he said.

On the fiscal deficit, the Minister said the focus would now be to contain it. And, although it is a difficult task given the circumstances, we will endeavour to keep the fiscal deficit as close to the target as possible.

The RBI is in favour of a softer interest rate regime, and it is a division of responsibility between the Government and RBI, said Mr Sinha. The Government tries to keep the fiscal deficit under control so that the RBI can come out with appropriate monet ary and credit policies, he added.

In his address at the Indian Banks Association meeting, Mr Sinha said many people would have died in the New York tragedy, many Indians among them. While the act of anti-social elements must be condemned, the better way to react to the situation was to a void panic reactions, he said.