Here is a verbatim transcript of the exclusive interview with P Chidambaram on CNBC-TV18. Also see the accompanying video.

Q: We hear that the liquidity situation is very tight, is the government contemplating more steps to improve liquidity?

A: Between Monday and Friday, the RBI has cut CRR by 150 basis points. This will infuse about Rs 60,000 crore of liquidity effective tomorrow. We have cancelled the borrowing which was scheduled to be done today. Between now and around October 20 when the supplementary is passed, a substantial amount of liquidity will be infused into the market. Further steps are required to infuse liquidity. The Governor has assured me that he will keep a careful watch and take those steps. The government on Wednesday decided that we will take steps to infuse liquidity because we recognized that the flow of credit smoothly and efficiently through the system is vital for the stability of the financial system.

Q: There are two kinds of scare that are now underway in the market. At a macro level, the IIP number has created a worry about whether the overall number will look anything like 7%. At a slightly more micro level, there is fear on the safety of deposits? Can you reassure us on both counts?

A: I have already reassured depositors that their deposits are safe. You might ask me why I say that, but I say that because our banks are well capitalized and regulated, and there is no need to worry about deficits.

IIP numbers are not very satisfactory, at the same time they are not very reliable, I have conveyed my concerns a couple of months ago to the ministry of industry and I conveyed them today. An independent economist has pointed out to me that at least 2-3 features of the current IIP numbers are quite out of line with any kind of calculations that we can make on intermediate goods. It doesn’t sound right at all. So, the IIP numbers have to be looked into more carefully. But please remember what happened to the IIP of July, they revised it upwards to 7.4%. So, it’s possible that the IIP of August is low, but the IIP numbers should be taken as just one input. We should look at many other numbers ‑ exports, imports, FDI, the capacity to raise ECBs and a number of other numbers. At this stage, it is difficult to say what the impact on the macro economy will be, but I am confident that our economy will still grow at a satisfactory rate.