Terming that most of the challenges faced by the Indian economy have been created by external factors, Finance Minister Arun Jaitley on Saturday expressed confidence in the country’s strong fundamentals to withstand such transient global trends.

“I have no doubt that our ability to withstand the transient global trend, created predominately by external factors is very strong,” the Minister said addressing a conference organised by Ministry of Steel.

Emphasising that macroeconomic indicators like inflation, forex reserve, capital investment in infrastructure and revenue collection are all positive, the Minister said if an economy exists on its own solid foundation and its own fundamentals are strong, then we need not to worry about global economic crises.  On the global turmoil, he said world is passing through some very challenging trends and prospect of the US Fed rate hike is creating uncertainty.

“US is a big economy, anything that happens there has big impact across the globe,” he said adding “China is another major global economy, and if their manufacturing data throws up adverse indication, because a global slowdown is going to impact them, that itself has an impact and shakes the entire (scenario). But these are only transient trend.”
Referring to the challenges faced by steel sector, the Finance Minister said, this sector is also impacted by the external factors.  Stress in the steel sector, Jaitley said, has resulted in the creation of non-performing assets for banks, and banks ability to lend to other sectors are compromised.

Steel sector is the largest contributor to the NPAs of the banks, he added. Gross NPAs of the public sector banks rose to Rs 2.67 lakh crore at the end of March quarter.

Assuring support to the sector, the finance minister said there is a need to address the root cause by making domestic industry competitive.  There is no other way of reducing raw material prices than making resources available to the people to the extent that they need it and market forces are capable of ensuring the reduction of that prices, he added.

Referring to capacity building, he said "sooner or later our mining capacity (has to be)... expanded so that the availability of excessive raw material itself will ensure that market forces bring down the raw material prices." There is no other way of reducing raw material prices than making resources available to the people to the extent that they need it and market forces are capable of ensuring the reduction of that prices, he added.