Iraq disturbance to punch hole in Budget:
ASSOCHAM
23/06/2014 14:36
Turmoil in Iraq will punch a big hole in the finances of the Indian government forcing it to go in for “further bitter medicine” for the consumers of goods and services that would exert pressure on prices pushing the economy further into the vicious circle of high inflation and low growth, an ASSOCHAM paper said seeking all-out efforts to somehow keep rupee strong at this critical moment. The paper, “Sudden and Shocking twist from Iraq to Indian Economy” has pointed out that a slew of policy announcements signaling commitments towards reforms can make a difference and sustain investor interest in the renewed India story that will sustain the Rupee strength. However, it cautioned that with rising aspirations and a high level of expectations from the Narendra Modi government, the patience level will be on a real test once the full scale impact of the Iraq crisis is seen. With the Brent crude crossing USD 115 to a barrel, it is only a matter of time that the oil marketing companies will go in for revision of petrol prices while the government may be able to put up resistance for some more time as regards diesel prices are concerned. Then there are issues of cascading effect of rising costs of transport such as Railways. “Because of the Iraqi crisis, the government cannot afford any slip and needs to keep round the clock watch on the developments. Besides, out of the box strategies need to be devised with pro-active approach towards the Middle East which has emerged as one of the most crucial areas from geo-political and economic perspective. For one, we source bulk of our crude oil requirement from the region. Second, the largest numbers of the forex earning Non-Resident Indians are based in the region. Thus, instead of waiting for the events to overwhelm us, we as a nation need to be pro-active along with other nations with similar interests,” ASSOCHAM Secretary General D S Rawat said. He said while the US has adopted a wait and watch policy, bigger economies like India, China and Japan must exert pressure on the American administration to take a global view of the events rather than focusing on interest of individual countries.
23/06/2014 14:36
Turmoil in Iraq will punch a big hole in the finances of the Indian government forcing it to go in for “further bitter medicine” for the consumers of goods and services that would exert pressure on prices pushing the economy further into the vicious circle of high inflation and low growth, an ASSOCHAM paper said seeking all-out efforts to somehow keep rupee strong at this critical moment. The paper, “Sudden and Shocking twist from Iraq to Indian Economy” has pointed out that a slew of policy announcements signaling commitments towards reforms can make a difference and sustain investor interest in the renewed India story that will sustain the Rupee strength. However, it cautioned that with rising aspirations and a high level of expectations from the Narendra Modi government, the patience level will be on a real test once the full scale impact of the Iraq crisis is seen. With the Brent crude crossing USD 115 to a barrel, it is only a matter of time that the oil marketing companies will go in for revision of petrol prices while the government may be able to put up resistance for some more time as regards diesel prices are concerned. Then there are issues of cascading effect of rising costs of transport such as Railways. “Because of the Iraqi crisis, the government cannot afford any slip and needs to keep round the clock watch on the developments. Besides, out of the box strategies need to be devised with pro-active approach towards the Middle East which has emerged as one of the most crucial areas from geo-political and economic perspective. For one, we source bulk of our crude oil requirement from the region. Second, the largest numbers of the forex earning Non-Resident Indians are based in the region. Thus, instead of waiting for the events to overwhelm us, we as a nation need to be pro-active along with other nations with similar interests,” ASSOCHAM Secretary General D S Rawat said. He said while the US has adopted a wait and watch policy, bigger economies like India, China and Japan must exert pressure on the American administration to take a global view of the events rather than focusing on interest of individual countries.
