The impact of the US interest rate hike should be minimal in India as the country is relatively well cushioned, Chief Economic Adviser Arvind Subramanian said on Thursday
Policy makers, including Reserve Bank of India Governor Raghuram Rajan, have been touting India as being more insulated to Fed-related volatility than other emerging markets due to its better economic fundamentals.
“I think we are relatively well cushioned. Volatility in Indian markets should be quite minimal,” Subramanian told reporters.
The Fed hiked interest rates for the first time in nearly a decade on Wednesday, signaling faith that the US economy had largely overcome the wounds of the 2007-2009 financial crisis.
MSME sector accounted for 40 per cent of India’s manufacturing and 45 per cent of merchandise exports. Any significant impact on the Indian economy would have hit MSMEs very badly.
Commenting on the rate hike, FICCI Secretary General Didar Singh said “We do not expect any major impact on India. Our economic fundamentals remain strong with improved growth and twin deficits largely under control.The rate hike also signals a stronger US economy, which bodes well for the pick-up of demand globally and hence for Indian exports of goods and services.”
Image Courtesy : The Hindu Business Line
