Over the past 18 months we have been witnessing two important developments in Europe as a result of the crisis, involving both monetary policy and fiscal policy.
India’s short-term debt is also very low - and Central Bank’s forward liabilities have been reduced to less than 1 per cent of reserves. This has gained us the confidence of the markets. This has been more than evident even during the recent period of uncertainties. Similarly, we have a flexible but managed exchange rate system.