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The Reserve Bank of India, in its Monetary Policy Review, has left rates unchanged. India may not be directly exposed to US sub-prime assets, as observed by the Governor. However, the indirect effects are already being felt by the Indian economy. The stock market is in doldrums; the realty sector is yet to recover from its ‘coma’; the IT sector, a major forex revenue earner, is struggling to come to terms with reality.

Gold and diamond markets have lost their sheen and do not appear to be good investment options. Hospitality and aviation industry are struggling to find business. Withdrawals appear to be the order of the day, and deposits are hard to come by. Public is in a state of panic and finding it difficult to find save avenues to park funds. There is financial chaos all around. For the Governor to state that “financial sector in India is stable and healthy” is a far cry from the reality!

Ashok Jayaram Bangalore

Time to act

The turmoil in the share market following the global turbulence in the financial sector is causing concern. The continuous bear run has resulted in huge losses to the investors, especially the retail.

Although the Finance Minister and the Prime Minister are making statements to reassure investors, the situation does not appear to be improving.

One of the worst affected in the market crash is the mutual fund sector which has invested to the tune of Rs one lakh crore in the capital market and the unprecedented fall in share prices has started to tell upon the NAV of the units.

Although there has not been too much demand so far for the redemption, the continued fall in NAV may prompt the investors to seek redemption, and if the demands become huge, there is bound to be sale of equities by the MFs, which again may aggravate the situation.

The need of the hour is for the government to constitute a body of experts to continuously monitor the situation and work out remedial measures to stem the fall instead of taking ad hoc steps.

T. R. Anandan Coimbatore

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