India has multiple layers of defence on Fed rate action: Sinha

New Delhi, Sep 17 (IANS) India has in place the necessary mechanisms to deal with the US Federal Reserve’s monetary policy action, that could trigger its first rate hike since 2006, Minister of State for Finance Jayant Sinha said here on Thursday.

“Whether it is the US Fed raising rates or other macro events, the best way to deal with it is to build multiple layers of defence. I think we have now put them in place,” Sinha told reporters on the margins of the India Economic Convention here hosted by Ficci.

He said Reserve Bank of India (RBI) Governor Raghuram Rajan was also well prepared for this.

“Because we have built those layers of defence — whether it is the fundamentals of our economy, our foreign exchange reserves, or whether it is our ability to access various markets — we can deal with these types of macro events.”

The Federal Open Market Committee of the US central bank is scheduled to meet later on Thursday to review the interest rate regime — an event keenly watched by the global financial markets, including India.

A rate hike there, it is feared, could trigger outflow of funds from emerging markets to the US.

Speaking about the economy in general, Sinha said the government was aiming to push the growth rate to around 8-10 percent per annum — focusing on supply-side measures rather then demand-induced steps so that cyclical issues can be avoided.

Sinha said the government also plans to hike the cap on equity investments by the state pension to 15 percent from five percent. This, he added, will not only calm the domestic markets, but also pave the way for for long-term fund investments.

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