The government thinks that even though foreign institutional investors (FIIs) have withdraw over $1 billion so far from India, the economy won’t face any serious threats. The financial crisis in the U.S,. which otherwise should had affected the domestic capital markets have not really had any adverse affect. In fact the domestic market is getting motivated by the collapse of the giants, investment banker Lehman Brothers and insurer AIG. 

The government is not expecting any sort of payment crisis..

A source from Finance Ministry informed on Wednesday, “As of now, turbulence in the U.S. financial market may have some impact on capital markets, but payment obligations are being met currently and there won’t be any payment related problem.”

However, the sources also said that there was no visible evidence that FIIs withdrawls had put of the capital markets.

The Indian stock market remained watchful,, even when on Tuesday the U.S. benchmark stock index Dow Jones finished in positive territory, after the Fed’s $85-billion rescue package for AIG.

After the financial crisis in U.S., the RBI took the step of imposing payment restrictions on the Indian entities of Lehman Brothers. Following in the same fashion, the central bank also took steps to stop the falling of the rupee against the U.S. dollar.

A source revealed, “In the light of the current development in the forex markets, the Reserve Bank will sell dollars through agent banks to augment supply in the domestic forex market or intervene directly to meet any demand-supply gap.”