Mumbai: The fundamentals of Indian economy are still strong although there has been some liquidity problem amidst the global financial crisis, finance minister P Chidambaram and Commerce minister Kamal Nath said today.

Chidambaram also hinted at the possibility of a rate cut by the Reserve Bank of India, saying, ''There is liquidity problem. But, we will address the liquidity issue. Governor (RBI) is already on record, if necessary he will take further measures to infuse liquidity.''

''Of course, liquidity will be provided. Everybody in the world is doing it. We are not affected to the same extent (by global financial crisis), but to the extent there is shortage of liquidity in the Indian market, we will provide liquidity,'' he said.

While the RBI and the stock market regulator SEBI have acted in concert to infuse liquidity into the system through a reduction in cash reserve ratio for banks and the lifting of cubs on issue of participatory notes by foreign institutional investors, Chidambaram said be was confident of the economy's strengths.

''My firm opinion is that fundamentals of Indian economy are still strong. Economy is still humming with activity and it is growing," Chidambaram said.

"Markets are reacting to what is happening to the US and Asian markets. In fact, after the statement of Fed Chairman (Ben Bernanke) yesterday evening and the manner in which Asian markets reacted this morning, we anticipated some impact on Indian markets," Chidambaram told reporters.

"Every government is providing liquidity. To the extent liquidity is needed, we'll also provide.

The RBI reduced cash reserve ratio for banks, helping to release an extra Rs20,000 crore into the market while the SEBI lifted the cap on P-noe issue by foreign institutional investors.

Chidambaram also quoted a report by the Centre for Monitoring Indian Economy (CMIE) to show that the investment rates are already high and that tax collection are better although lower than in the previous month.

''Investment at the end of June 2008 is little over Rs6,600,000 crore against Rs4,400,000 crore at the end of June 2007. In July, there has been further investment of Rs2.18 lakh crore and in August, another Rs1.32 lakh crore,'' he said.

These, however, are investment intentions that have been announced and firmed up, he added.

Our banks, Chidambaram pointed out, also are all well capitalised, with capital adequacy ratio of between 10 per cent and 13.65 per cent - well above the Basel norms.

Commerce and industry minister Kamal Nath too sounded a note of confidence saying that despite the bloodbath on the bourses the Indian economy remained relatively insulated because of its strong regulatory environment.

He, however, said no country can remain ''decoupled'' from the global developments.

Planning commission chairman Montek Singh Ahluwalia also tried to calm worries, saying the turmoil in stock markets was ''a global crisis'' and ''India is not alone''.