Seeking to assuage investors' negative sentiment, Finance Minister Pranab Mukherjee on Wednesday said that India's growth story is intact.
Addressing the Parliament, Mukherjee said that the government will take austerity measures to ensure fiscal consolidation. "Will take some austerity steps to convey that it is responding to situation, but I am not pressing panic button," he said.
He emphasised the need to take serious steps to cap the subsidy bill at 2% of the GDP. The government cannot pass the entire burden of high oil prices to the consumers, he added.
Mukherjee attributed the drastic fall in the Sensex on Wednesday to the Greece crisis. He said that the Eurozone uncertainty was causing a sell-off in all the Asian markets. "India cannot ignore the global economic situation," he added.
Stating that the there were concerns over the slowdown in the GDP growth rate, Mukherjee said that the government is taking adequate steps to address the problems. The RBI is keeping a close watch on the economic situation, he added.
The Sensex fell below the psychological 16,000 level for the first time since January 9, 2012, as weak global cues and a depreciating rupee hurt sentiment.
The rupee hit a record low against the dollar on Wednesday, succumbing to the steep risk aversion hitting global markets and highlighting the vulnerabilities of a country facing challenging fiscal and economic outlook.
The rupee fell to as low as 54.36 to the dollar, breaching its previous record low of 54.30 set in December. It was last trading at 54.335/35 compared to its 53.79 close on Tuesday.