A recent press report said that the immediate impact on the US rating downgrade on India is not that damaging. Dr.Subir Gokarn, Deputy Governor, RBI told that the RBIs commitment is to ensure that a disruption does not take place.
The impact of the downgrade so far has largely been on the financial institutions, banks, commodity prices and according to him the US rating downgrade caused “some turbulence”. However the real concern is deeper as per the report.
Further Mr.Subir said that there is an increasing negative dynamics in the US and the growth outlook for the US, the UK, France and Germany has been lowered significantly in the past few days. All of these add up to a pessimistic global scenario.
Subsequently he said that, there is a significant change in the environment and the US stance can maintain current reserves till 2013 will keep commodity prices up which is a problem for India and that’s where India’s possible links lie.
As per the report, on the impact of the global scenario on investment, Dr.Subir said that as long as India sustains the growth trajectory it might well work in favour of the emerging markets. Further it comes down to how well India can manage our macroeconomic conditions.
The recent hike in base rates by the RBI has made banks loans (home loan, personal loan, vehicle loan, business loans etc,) very costly.