The finance ministry in the country has been more than keen to adopt more monetary stimulants to tackle the impact of global financial crisis. Chief Economic Advisor to the ministry, Dr Arvind Virmani said that the monetary policy should have been more aggressive than it has been until now to counter financial shocks.

"When the trigger is an external financial crisis, monetary steps are the primary defense. When these external events are addressed by policy, the outcome is influenced by the two... My own view is that monetary policy (of the country) should have been much more proactive and aggressive than perhaps it has been," said Dr Virmani.

India, which needs to enhance infrastructure spending to support its slow growth, will aptly counter the current slowdown, added Virmani. He said that earlier also many emerging economies in Eastern Europe and Latin America have responded appropriately to the slowdown and India too would handle it safely. "I have great faith in Indian entrepreneurship. We must accelerate to compensate for the decline in private investment," he added.

To counteract the slowdown and renew demand, RBI has recently cut its benchmark repurchase rate to 6.5% from 7.5%. Besides it has also announced a 4% across the board reduction in the excise duty and an extra spending of Rs 20,000 crore to improve consumption.

Speaking on the rupee status, Virmani said that rupee is declining against dollar because of the latter's appreciation against major world currencies and not due to innate weakness of the rupee. "Rupee is depreciating because the US dollar is appreciating against global currencies," he said.

Meanwhile he also believes that the adequate availability of trade credit would help to bounce back the economy. "The freezing of trade credit has left a negative residue in the system. Unfreezing of trade credit is an important benchmark... Experts, who earlier predicted easing of trade credit by December, are now hoping that it can be achieved by June next year," he said.

Experts also believe that there is a need for calibrated fiscal policy to boost growth in the economy. Growth is anticipated to slow down to around 7% this year against a near to 9% in the last 4 years.