Prime Minister Manmohan Singh on Thursday said India is passing through a difficult economic situation due to a combination of domestic and external factors such as the US monetary stance and the conflict in Syria which the country has to "reckon" with.
"It cannot be denied that the country is faced with a difficult economic situation, and there are several causes,” the prime minister said in the upper house of parliament.
"I do not deny that there are some domestic factors but there are also international factors arising out of the changes in the US monetary stance,” Singh said in response to repeated demands from the opposition for a statement on the state of the economy.
"There are also problems created by the new tensions that are on the horizon in Syria and they have inevitable consequences for oil prices. So we have to reckon with all those uncertainties,” he said.
Rising tensions over a possible Western move for a regime change in Syria will have negative implications for the Indian economy as the country meets nearly 80 percent of its crude oil needs though imports.
Oil prices have surged in the international markets in the recent weeks on fear of a US-led attack on Syrian that would disrupt supplies from the Middle East.
The prime minister assured the lawmakers that he would make a statement on the current economic situation Friday.
"I will be very happy to make a statement tomorrow. I need some time to reflect on what I have to say, but I would be quite happy to make the statement tomorrow,” Singh said.
Manmohan Singh made the brief comment after several opposition leaders, including Leader of Opposition Arun Jaitley, sought his statement, saying there was a panic situation in view of the huge volatility in currency and equities markets coupled with slow growth and persistent high inflation, and the house wanted to know what the prime minister had in mind to deal with this.
The Indian rupee has lost almost 20 percent of its value against the US dollar since the beginning of the current financial year, largely due to pulling out of money by foreign funds from the Indian markets after the US central bank hinted that it would lower fiscal stimulus as the economy shows sign of recovery.
Foreign funds have pulled out nearly $12 billion from Indian debt and equities markets since the US Federal Reserve hinted at tapering stimulus in late May.
The Rupee had slumped by nearly four percent to hit a record low of 68.85 per dollar Wednesday, the biggest single-day percentage loss since October 1995.
However, the currency recovered smartly and surged 3.5 percent to close at 66.55 against a dollar Thursday after the prime minister's statement. This is the biggest single-day gain in the value of Indian currency since January 1998.
The Indian stock markets have also witnessed extreme volatility in the recent weeks. The benchmark Sensex of the Bombay Stock Exchange closed 2.25 percent, or 404.89 points, higher at 18,401.04 points Thursday.
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