Warding off the fears of adverse impact of US rate hike on Indian economy, Chief economic Advisor (CEA) Arvind Subramanian has said that though the interest rate hike by the US Federal Reserve will bring volatility and uncertainty in capital flows into emerging market economies, but India is very well cushioned to absorb the impact. He further said that “If at all there is an impact, it would only be for a short term. India will be less affected than other countries.”
Subramanian said the Fed rate hike was “anticipated” and that the Reserve Bank of India (RBI) had a few days ago taken “account of this in a very sensible way”. He added that ever since the US elections, there has been a big flow of funds from emerging markets. Given that we are a bright spot, the impact on us will be much less.
Economic affairs secretary Shaktikanta Das too observing that the Fed rate hike has ended the uncertainty surrounding the major global event, said the Indian markets have already factored in the impact of the increase. “Projection for growth outlook remains fairly stable and only marginally improved. Markets had factored in the rate hike and we expect that our markets, the currency market, to stabilise after initial ripples or volatility.