The government and the RBI will step in to contain the impact of an uncertain global economic situation, if needed, Chief Economic Adviser to Finance Ministry Kaushik Basu said on Monday.

Shares across Asia fell sharply on Monday despite efforts by global policymakers to stem a collapse in investor confidence after S&P downgraded U.S. credit rating from AAA to AA+ last week.

In early trade, the BSE Sensex fell 2.5 percent on Monday, while the rupee weakened past 45 to the dollar for the first time in five weeks following a global equities rout.

In an announcement early on Monday before the markets opened for trading, RBI said it would ensure adequate rupee and forex liquidity, a move to calm the jittery markets.