Singh met top industry leaders on Monday in New Delhi and asked them to remain cautious but also assured them that the banking system and deposits were safe and the government would take more steps to protect economic growth.
"A crisis of this magnitude was bound to affect our economy and it has. International credit has shrunk with adverse effects on our corporates and banks. Global uncertainty is also tending to dampen investor sentiment," he was quoted as saying by PTI.
He asked industry to refrain from any "knee-jerk" reaction such as large-scale lay-offs, which might lead to a negative spiral, and said "industry must bear in mind its societal obligations in coping with the effects of this global crisis", which the Prime Minister felt "is now likely to be more severe and prolonged".
"Our first priority was to protect the Indian financial system from possible loss of confidence or contagion effect ... the situation is abnormal and we need to be constantly on the alert. The situation is being watched on a day to day basis and more steps will be taken if required."
RBI cuts CRR, repo rates to prop up economy
The meeting was attended, among others, by Ratan Tata, Mukesh Ambani, KV Kamath, Shashi Ruia, Deepak Parekh, KP Singh, where Finance Minister P Chidambaram, RBI Governor D Subbarao and Planning Commission Deputy Chairman Montek Singh Ahluwalia represented the government.
Singh said additional liquidity and reduction in repo rate will help to "provide credit at reasonable rates".
"The government will take necessary monetary and fiscal policy measures on the domestic front to protect our growth rates," he said.
Singh also added that India will also seek reform of international financial institutions to prevent recurrence of such crisis.
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