Indian economy may see a dip in exports, capital flows: C. Rangarajan
C. Rangarajan, the Prime Minister's Economic Advisory Council Chairman on Monday said that United States' downgrade by Standard and Poor's would greatly affect exports and moderate capital flows in India.
DESPITE OF several efforts to maintain calmness in the Indian markets, C. Rangarajan, the Prime Minister's Economic Advisory Council Chairman on Monday said that United States’ downgrade by Standard and Poor’s would greatly affect exports and moderate capital flows in India.
Speaking to media persons, he was quoted saying by a leading Indian newspaper that more than the downgrade, the impact for the rest of the world will be the slow pace of recovery in the U.S. In the first half of the current calendar year, the growth rate in the U.S. was 1.5 per cent. Perhaps for the year as a whole, other growth rates may not be much higher than that.
That's a very, very slow pace of recovery and that has implications for the world in terms of capital flows, in terms of trade flow.
Ever since the downgrading, Indian markets apart from the global markets have seen considerable slump. The Sensex on Monday closed at 315 points, recorded as its lowest in the last fourteen months.
However, Finance Minister Pranab Mukherjee’s Chief Economic Advisor Kaushik Basu was quoted saying by the same daily that right now, we don't need any special measures. Should the need arise, the government and the central bank [the RBI] are in a position to step in. But barring the immediate reaction to what is happening now, the India story remains robust.
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