Brexit will have a passing effect on India, says Finance Minister Arun Jaitley

Beijing: Britain’s decision to opt out of the European Union will have a passing effect on India as the emerging economy has strong economic fundamentals and the resources to counter any eventuality, Finance Minister Arun Jaitley said here on Friday.

“It will have a transient impact which reverses itself in due course,” Jaitley, on a five-day visit in China, told Indian journalists here. He said economies whose “fundamentals are strong” will not be affected for a long time.

“If fundamentals of an economy is sound, impact of this, beyond initial days, gets diluted,” he said, following up on a statement earlier that the government and the Reserve Bank of India were prepared, and working closely together, to deal with any short term volatility.

“All countries around the world will have to brace themselves for a period of possible turbulence, while being watchful about, and alert to, the referendum’s medium term impacts,” the finance minister had said in the statement earlier.

“But as investors look around the world for safe havens in these turbulent times, India stands out both in terms of stability and of growth. India, as you are all well aware, is amongst the fastest growing major economies in the world today.”

The finance ministers remarks came on a day when the impact of Brexit led to a key stocks index, the BSE Sensex, to close at 26,397.71 points, down 604.51 points, or 2.24 percent. At one point, it was even down as much as 1,090.89 points, or 4.04 per cent.

The rupee also took a major beating of as much as 96 paise and plunged to an intra-day low below 68 to a US dollar. It eventually closed around 65 paise lower at 67.92 against the dollar.

Jaitley met some investors on Friday and spoke about the ease of doing business in India. He is due to attend the Board of Governors meeting of the Asian Infrastructure Investment Bank (AIIB). India is one of the 56 members of the organisation.

The finance minister will also meet his Chinese counterpart Lou Jiwei on Monday, officials said.