•Hello and welcome to walk the talk. I am Shekhar Gupta and my guest this week, Montak Singh Ahluwalia, key member of a very tiny core team that’s watching and acting not necessarily reacting on the current crisis that’s going on. Montek what we need is a few words of calm and confidence.

Well I don’t know about calm and confidence. But I think this is a very difficult crisis and as you say a lot of us are looking at it, trying to gauge the dimensions of it. It is a complicated, not a simple matter. I mean there is a global crisis going on so what we are trying to do is manage the economy within a context where globally its highly destabilized. But you know I think crisis do come to an end. So I think one should not assume when you are in the middle of what is a very difficult period that this is going to continue forever. And I think there are some signs in certain dimensions anyway the efforts that have been made by the govt have handled the position. But you know this is an unfolding story and its going to take a little bit more time to be sure that every aspect is fully taken care of.

•What are some of these signs?

When the crisis began you know six weeks ago the real concern was the stability of the banking system. Will there be a payment’s crisis? People fearing the safety of their deposits. In an economic situation, the stability of the banking system is absolutely the top priority and I think it will be absolutely fair to say that the actions that the govt has taken have restored calm. I mean nobody should be worried about their bank deposits. The Indian banking system is stable, sound and functioning. Infact there was a lot of concern about two week ago that the banking system didn’t have enough liquidity. We took very quick action. The reserve bank I think in about ten days. There was 250 basis point reduction in CRR, a new 50 basis points window in the SLR as an additional window plus putting money into the banks because of these agricultural advances. Its made a big difference. Banks today are liquid. Now the 2nd stage of the concern is where they are liquid but are they lending enough. And I think this is important.

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