Political instability is normal in a democratic country and should in no way be construed as a weakness of the country, he said. India could not sacrifice its democratic system to get a good rating, he added. Sinha admitted that the downgrade would make external commercial borrowings marginally costlier. But the government would not let infrastructure project languish for want of funds.

``A lot of funds have remained unutilised in recent times as thecountry has lacked an investment atmosphere so far,'' he said, adding that there would not be any pressure on domestic interest rates or the fiscal deficit due to the US sanctions and the downgrade.

Sinha said that the country's forex reserves had not been used for market intervention to prop up the rupee. "The recent depletion in reserves has happened as the Reserve Bank of India has provided the forex to trade and industry,'' he said. The forex rate will continue to be determined by market forces.

Sinha said that government is negotiating hard with the World Trade Organisation to protect the interests of the country. ``We have no plans to withdraw from the WTO,'' he said.

The US government needs to spell out the role of its banks operating in india in the post-sanctions regime. The government was anticipating response on this score. The government had fully studied the situation after the Pokharan blasts and was fully geared up to face any challenge. He urged the people not to panic on falsepropaganda, he said.

Speaking about the crisis of confidence in the stock markets, Sinha said the government was planning to introduce stringent measures to protect the interests of small investors. The finance ministry had already asked Sebi to prepare a comprehensive list of measures for this purpose and would discuss the matter further with the market regulator.

Sinha has also asked Sebi to check excessive fluctuations in the market. "The market cannot be bullish in the morning and bearish in the evening," he said, adding that the market can function with normal fluctuations.

Asked why the FIIs were now choosing to exit, Sinha said they should take a hard look at the better part of Indian economy.

The government was, however, prepared to look into their problems. "I am not excessively concerned about the FIIs' exit," he said. Talking about steps to revive investor sentiment, Sinha said that he had consulted his counterpart in the law ministry to introduce the buyback of shares as soon as possible.Investor protection against fly-by-night companies was another area of concern. ``We will liquidate the assets of rogue companies which have defaulted in paying investors and book the guilty,'' Sinha said.