New Delhi, Nov 3 Prime Minister Manmohan Singh on Monday asked India Inc to refrain from "knee-jerk" reactions like lay-offs after admitting that India was not untouched by the global financial crises.

Singh asserted that saving investors' confidence is the first priority of his government. He further tried to dispel fears of investors regarding safety of bank deposits, saying that government stands behind the banks.

"While every effort needs to be made to cut costs and raise productivity, I hope there will be no knee-jerk reaction such as large scale lay-offs which may lead to a negative spiral," he said.

"Industry must bear in mind its societal obligations in coping with the effects of this global crisis. Government and industry must act in a true spirit of partnership to meet the challenges that lie ahead."

Expressing his doubts over the global financial crisis, he said that the situation is now likely to be more severe and prolonged. Singh also asserted that saving investors' confidence is the first priority of his government.

He further tried to dispel fears of investors regarding safety of bank deposits, saying that government stands behind the banks.

Singh was speaking to media after meeting industry leaders and discussing with them current economic situation.

Commenting on global financial meltdown, the Prime Minister said: "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."

The PM, however, voiced optimism by saying that a vigilant stand could tackle the financial crisis.

He further assured that his government is closely watching the market. On the international front, he said: "We are working closely with other countries to ensure co-ordinated policy action and increased development co-operation for the containment of this crisis."

However, he said that the industry should refrain from any "knee-jerk" reaction such as large-scale layoffs, 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."

The Prime Minister said that government would take measures for additional liquidity to help provide credit at reasonable rates. Singh said additional liquidity and reduction in repo rate would help to "provide credit at reasonable rates".

He vowed to take all necessary monetary and fiscal steps to protect growth rate and tide over the current crisis. (ANI)