Buffeted by fallout from the Greek crisis and a collapse in investor confidence in India, the rupee falls to record low against dollar. (Rajesh Kumar Singh/AP)

Facing a collapse in investor confidence and a decline in the rupee to a record low against the dollar, India’s finance minister said Wednesday it was time for “some austerity” — but not time to panic.

Yet with the country’s fractious coalition government seemingly unable to agree on any measures to further liberalize the economy, and with government finances being bled dry by ballooning welfare spending and costly subsidies for food, fertilizer and especially fuel, the chances of a dramatic turnaround in sentiment seemed slim.

Finance Minister Pranab Mukherjee blamed much of the rupee’s fall on the weakness in the euro and fallout from the Greek economic crisis, and he insisted that India’s growth story was “intact.”

But business confidence in India has been battered by a slowdown in economic growth, several controversial tax decisions that have scared away foreign investors, and widespread concerns about government borrowing and a widening trade deficit.

Mukherjee said he would unveil some austerity measures “whether people like it or not,” although he later said he had not decided what those measures should be. “We are not pressing the panic button,” he said.

India’s economy is still growing at close to 7 percent, thanks largely to robust domestic consumption. But industrial production is falling and inflation is stubbornly high.

The rupee has fallen nearly 10 percent since February and has been the worst-performing emerging-market currency in Asia since March. On Wednesday, it fell as low as 54.46 to the dollar, while the stock market fell 1.8 percent.

At the end of last month, the Standard & Poor’s ratings agency cut its outlook for India to negative and warned of a possible downgrade in the country’s debt rating as a result of high levels of government borrowing and “the current political gridlock.”

“It’s not looking pretty,” said Tushar Poddar, managing director for global economics, commodities and strategy research at Goldman Sachs in Mumbai. “We’re slowly edging towards very dangerous territory, which is a very weak currency, leading to more worries about corporate debt as well as imported inflation.”

In Parliament, opposition lawmaker and former finance minister Murli Manohar Joshi asked whether the country was heading toward the sort of balance-of-payments crisis that it faced in 1991. That crisis ultimately forced India to liberalize its economy.

At Bank of Baroda in Mumbai, chief economist Rupa Rege Nitsure said India’s government tended to respond best in a crisis and might yet take some of the corrective measures necessary to restore investor confidence.

Others were not so sure. “We’ll have to believe it when we see it,” Poddar said.

A defiant Mukherjee made it clear last week that there were limits to how far he would bend to please foreigners wanting to invest in his country.

“We were not eating lizards when we didn’t have foreign direct investments,” he told Parliament.