Financial sector regulators, including the Reserve Bank, will review India's preparedness to deal with the looming global economic crisis and devise steps to mitigate its impact on the country at their meeting here tomorrow. The meeting of the Financial Stability and Development Council (FSDC) sub-committee, to be chaired by RBI Governor D Subbarao, will also see discussion on an additional regulatory mechanism to deal with global problems, a Finance Ministry official told PTI. "We will discuss whether everything is properly functioning and also assess what more needs to be done. We don't want to take any chances," he added. It is feared that the global economy might slip into a second double-dip recession in view of the slowdown in the US and sovereign debt crisis in eurozone countries. Subbarao, in his intervention at an IMF meeting in Washington in September, had warned, "We are rapidly running out of solutions. The two big flash-points are: renewed anxiety in the US about recession and the deepening of the sovereign crisis in the euro area." Although it is quite difficult to accurately assess which sectors of the economy would be hit the most, the regulators are much more proactive now than they were at the time of an earlier meltdown in 2008, which was triggered by the collapse of America's iconic investment banker Lehman Brothers, he said. Subbarao will chair the meeting using a video conferencing facility. It will be attended by top functionaries of the Finance Ministry, including Secretary R S Gujaral, Department of Economic Affairs Secretary R Gopalan, Department of Financial Services Secretary D K Mittal and Pension Fund Regulatory and Development Authority Chairman Yogesh Agarwal. The members will also share their experiences at various international fora they have attended in the past to outline the additional steps needed to safeguard the economy against contagion of the crisis. Issues concerning inter-regulatory coordination and regulatory gaps will also come up for discussion. According to RBI estimates, growth of the Indian economy will moderate to 7.6% in the current fiscal from 8.5% during 2010-11. The government set up the FSDC under the chairmanship of Finance Minister Pranab Mukherjee to strengthen and institutionalise the mechanism for maintaining financial stability, development and inter-regulatory coordination, sources said.
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