COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Sinha says Kargil flare-up won't affect economy

Gurdip Singh in New Delhi

Finance Minister Yashwant Sinha today said that there would not be any major economic fallout of the Kargil flare-up as he did not expect escalation in the tensions.

Addressing the Forum of Financial Writers in New Delhi, Sinha said eventually the stock markets and exchange markets will be able to discount the event and are likely to show promising signs of moving up.

Sinha said the Kargil situation had indirect impact including that on the stock market. He expected the gross domestic product growth rate to be about seven per cent in 1999-2000.

The finance minister said the disinvestment process was likely to suffer a setback as the government would be able to carry forward this only for those units where decisions have already been taken.

Sinha said the stock markets react to all issues that have even a remote bearing on it. He noted that the stock markets had fallen by five per cent in India while the Pakistan's stock exchanges fell by 13 per cent.

Even the rupee had shown some signs of nervousness but was back to stable conditions, he pointed out.

''Kargil is not a cause for economic concern,'' he said. "It is a limited operation restricted to one sector of the line of control. Escalation is not warranted by the logic of the situation. The limited operation will not create a situation that may cause economic problems.

The finance minister said the overall fundamentals of the economy remain strong. Agricultural production was promising and industrial growth was reviving.

Sinha said he had evidence by way of studies and other reports that the small investor was returning to the stock markets.

A financial writer countered this and said that the rise in the stock markets before the Kargil flush-out was a result of money pumped in by the FIIs and fund managers.

He demanded an inquiry into the Securities and Exchange Board of India saying that it had messed up things so that the small investor would not come back to the stock exchanges for the next five to six years.

UNI

RELATED REPORTS:

Kargil flare-up and economic sanctions

Financial markets chill to Kargil drill

Business news