Finance minister P Chidambaram says, financial markets are the heart of an economy and the government is committed to running well regulated financial markets and promoting investment. Addressing a press conference in Mumbai today, Chidambaram said that the economic situation in India is still very challenging but added that the government has taken a number of steps to improve investor sentiment and is still committed to bring in more reforms. Promisisng more reforms, he said the government hopes to get back on a high growth path by channelizing savings and investment in the right direction and by helping entrepreneurs to raise capital.

On the issue of inflation, the finance minister said that that there are numerous reasons for price rise, ranging from depreciation of rupee to supply demand mismatch. He said,a number of steps taken by the government, like the diesel price hike will also lead to a rise in inflation in the near future but in the long run the steps taken to contain inflation will surely bear fruit.

Talking about FDI in insurance, Chidambaram clarified that insurance companies and IRDA have not just agreed but supported the government’s move to raise the cap from 26 percent to 49 percent. He said that the government will try to convince the opposition that the decision was taken with the best of intention for the insurance industry and also to promote its growth.

In order to further boost the economy and to reap the benefits of reform process, Chidambaram said that the government will try its best to pass certain crucial bills including the Insurance amendment bill and the Banking Regulations amendment bill in the winter session of parliament.

Talking about yesterday’s flash crash at NSE, Chidambaram said that the matter is being investigated and any action necessary will be taken by SEBI. He assured that there is no systemic risk to the capital markets.

Earlier today, the finance minister held a series of meetings with top officials from Reserve Bank of India – RBI, the Securities and Exchange Board of India – SEBI apart from meetings with the heads of the stock exchanges and the leaders from mutual fund industry. This was Chidambaram’s first visit to Mumbai after taking over as Finance Minister and follows a series of economic reforms introduced by the government recently.

Chidambaram said that he was in Mumbai to brush up his knowledge about the financial markets and rediscover the path forward for well functioning and well regulated financial markets.