India's exports to be hit if US recovery bumps: PMEAC
Prime Minister's Economic Advisory Council on Monday said India's exports would be impacted if the recovery of the US economy is hindered but expressed optimism that the country would overcome its debt crisis.
New Delhi: Prime Minister's Economic Advisory Council on Monday said India's exports would be impacted if the recovery of the US economy is hindered but expressed optimism that the country would overcome its debt crisis.
"...I can only say, any mishap in the developed world and any factor contributing to the recovery becoming even slower than what it is now will have impact on India in terms of our ability to exports," Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan told reporters here.
He was responding to a query on what could be the implications of the debt crisis in the US where President Barack Obama announced this weekend an agreement between lawmakers over a deal to break the deadlock over raising the country's borrowing limits.
In its forecast for 2011-12, the PMEAC has pegged India's total exports at USD 330.2 billion as compared to USD 250.5 billion in 2010-11.
Rangarajan said that more than the US debt crisis, it would be the economic growth in America that would have a bearing on Indian exports.
"In the second half (of 2008-09), the growth rate came down quite sharply. Therefore, the effect (on exports) will be because of a slowdown in the growth rate of American economy," he said.
India's exports to the US stood at over USD 35 billion in 2009-10, while for the April-December period 2010-11, it was at USD 30 billion.
Ahead of the Tuesday deadline for raising the debt ceiling above its current USD 14.3 trillion, Obama announced that Republican and Democratic congressional leaders have reached an agreement, but cautioned the crisis was not over yet.
The treasury had warned that in case of the US failing to raise the sovereign debt ceiling by August 2, the country would run out of the money to pay all its bills, leading to a possible default on debts for the first time in its history.
"I think this particular crisis may be overcome...I think that when (the) chips are down, some compromise will be worked out," Rangarajan added.