Meanwhile, the RBI has said it “would respond swiftly and even preemptively to any adverse external developments impinging on domestic financial stability, price stability and inflation expectations and the continuation of the growth momentum of the Indian economy.”

Experts don’t rule out a cut in policy rates (like bank rate, repo and reverse repo rates). “Given the worsening global situation, cuts are not ruled out. However, with growth in M3 (money supply) at 21%, credit at 26% and inflation at 12%, the RBI has little leeway unless a sharp fall in commodity prices results in quicker easing in inflation to single digit levels,” said Rohini Malkani, Economist, Citigroup India.

THE FALLING

DOW JONES Industrial ended Thursday 679 points (7.3%) down, taking losses in last 6 trading sessions to 20%. Opened even lower on Friday; was down 410 points (4.78%) in choppy trade at press time

EUROPEAN MARKETS ended deep in the red on

Friday: FTSE was down 8.85%, DAX down 7.01%, CAC40 down 7.73%

ASIAN MAYHEM

continued

Thailand – 9.6%

Japan – 9.6%

Philippines – 8.3%

Singapore – 7.3%

Hong Kong – 7.2%

S Korea – 4.1%

Malaysia – 3.6%

China – 3.6%

EXCHANGES in Russia, Austria, Indonesia, Iceland, Romania, Ukraine and Italy either shut down or suspended trading

WHAT THEY SAID

Govt will inject more funds into the system within 10-12 days through supplementary demands for grants which will come before Parliament this month.

P Chidambaram, Finance Minister

I don’t think we are heading towards recession. India will register a growth rate of 7.5 to 8 per cent this fiscal… Though capital outflows are putting pressure on the liquidity and the rupee, our banking system has not been affected to the same degree as in the West… The Reserve Bank has taken several measures… the government is watching the situation on a day-to-day and hour-to-hour basis.

... contd.