The Finance Minister, Mr Pranab Mukherjee sees FIIs continuing to repose confidence in India’s growth story even as there may be temporary outflows owing to recent developments such as Standard & Poor’s downgrade of the US sovereign credit rating from ‘AAA’ to ‘AA+’.

Unlike the trend witnessed post 2008, the foreign institutional investors (FII) inflows this year could be "faster and greater" as India’s fundamentals are strong and global investors could get higher returns here, Mr Mukherjee told reporters at Parliament House on Monday.

He highlighted that India was in a better position than many other nations to manage the challenges arising from the uncertainty in the global markets.

"These developments (US sovereign rating downgrade) could have some impact on India. There could be some impact on the capital and trade flows. But as India’s growth story is strong, we could see FIIs seeing India as an attractive investment destination even if there is any temporary outflow", Mr Mukherjee said.

The Finance Minister’s statement calmed the nerves of the market and helped the Sensex recover more than 250 points from the day’s low of 16,759.45. The sensex recovery was also aided by European markets opening, which resisted sharp falls like its Asian peers.

Mr Mukherjee also noted that the softening of the international commodity prices, especially fuel oil will help check inflationary pressures in the economy. It will also help in maintaining the fiscal balance for the year 2011-12, he added.

The Finance Minister also said that the Government will fast track the implementation of pending reforms and keep close eye on international developments. "Our economic fundamentals are sound and we would also focus on encouraging greater domestic consumption and give impetus to the drivers of domestic growth", he said.

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