Financial sector regulators to take stock of economy

Key financial sector regulators are set to meet later this week to take stock of the economy

Key financial sector regulators are set to meet later this week to take stock of the economy. The sub-committee of the Financial Stability and Development Council (FSDC) is scheduled to meet on June 14 to review the economic situation,in the backdrop of the continuing euro zone crisis and the domestic economic slowdown.

The meeting will focus on a number of issues primarily the causes for the current growth slowdown. The impact of the deteriorating global situation in terms of the euro zone crisis and its possible impact on India will also be discussed, said a source privy to the development,adding that it will also focus on potential systemic risks for the country.

The meeting,which will be held in Hyderabad,is also expected to analyse the reasons behind the depreciating Indian currency. The FSDC sub-committee is scheduled to meet just ahead of the Reserve Bank of Indias mid-quarterly monetary policy review on June 18. The RBI is widely expected to cut key rates by at least 0.25 per cent to ease liquidity and stimulate lending.

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High interest rates and poor investment sentiments led to GDP growth slowing to a nine year low of 5.3 per cent in the fourth quarter of 2011-12,bringing down the growth rate to a weaker than expected 6.5 per cent for the whole of last fiscal.

Meanwhile,chief economic advisor Kaushik Basu recently warned that if the euro zone breaks up,it will be more disastrous than the 2008 global financial crisis triggered by the fall of the Wall Street banks,from which the global economy is yet to recover. The Indian currency too has steadily depreciated over the last few months to touch a record low of 56.52 against the US dollar. The sub committee of the FSDC is headed by RBI governor D Subbarao and includes as its members IRDA chairman J Hari Narayan,Sebi chairman UK Sinha,PFRDA chairman Yogesh Agarwal,department of economic affairs secretary R Gopalan and Kaushik Basu.

Assessing Situation

The sub-committee of the Financial Stability and Development Council is scheduled to meet on June 14 to review the economic situation

The meeting is scheduled just ahead of the RBIs mid-quarterly monetary policy review on June 18

The sub-committee is headed by RBI governor D Subbarao