Finmin to set up a liquidity advisory panel

Addressing overall liquidity crunch fears and bringing Indian Inc on board, the finance ministry has set up a six-member panel to make a quick assessment of the requirement for liquidity and advice it on what needs to be done. The move indicates the government’s seriousness to take any step required to increase liquidity flow to trade, commerce and industry and instill confidence on the Indian economy.

The decision follows a number of representations from banks, other financial intermediaries, corporates and small businesses, which have approached finance minister asking that the government address liquidity concerns in a comprehensive manner. It was impressed upon the finance minister that intermediation of credit must take place smoothly and efficiently.

Lobby groups, the Confederation of Indian Industry (CII) and the Associated Chambers of Commerce & Industry of India (Assocham), had asked for a Rs 100,000 crore liquidity infusion through rate cuts and easing of overseas borrowing norms. The CII has also asked the Indian government to set up an exclusive fund out of the country’s foreign exchange reserves to invest in Indian securities. The fund will prevent the depreciation of the Indian rupee, that fell to over Rs 48 to the US dollar.