STATESMAN NEWS SERVICE
New Delhi, 1 October
The US Government shutdown is unlikely to have any major impact on the Indian economy, the economic affairs secretary, Mr Arvind Mayaram, said here today even as exporters expressed fears that it would hit them hard.
After a gap of 17 years, the US Government was shut down today, raising concerns over its impact on the world’s largest economy and also the emerging markets such as India.
“We hope the impasse will be resolved so that there is no spillover to the global economy. As of today, I don’t see any major impact on the Indian economy on that account,” Mr Mayaram said.
“We are quite hopeful that the shutdown in US Government will not impact the US economy and there will be no spillover on global economy,” he told a media briefing here.
The US Government today began the shutdown as Republicans and Democrats failed to strike a deal on spending and budget mainly due to their differences over ‘Obamacare’, the flagship healthcare programme of President Barack Obama.
Industry reaction: The shutdown will certainly hit Indian exports because of crippling of the trade facilities at the ports and airports, said Assocham president Rana Kapoor. It is not only in India but also in America that political parties are polarised to the extreme positions to the detriment of the common people, industry, trade and business, he added.
“The biggest worry for the entire world economy is looming and we hope that the Republicans and Democrats reach a common position on the issue of raising the $16.7 trillion debt ceiling by the deadline of 17 October.
“If they are not able to resolve that issue, the USA faces the prospect of default on repayment of treasury bonds, an eventuality which can be a bigger global disaster than the collapse of Lehman Bros in 2008. The American bonds, at times are considered safer than cash. That faith could get destroyed and a massive tremor could follow then,” Mr Kapoor said.
“America is literally too big to fail for the rest of the world, whether we like it or not,” he added.
The shutdown is a very bad development for Indian exporters who will face problems of doing business transactions, said the Export Promotion Council of India.
Trade facilitation activities such as ports, cargo, regulatory clearances may get affected and result in holding up the landed cargo there, it said in a Press statement.