RAIL STOCKS

US Government Shutdown: What it means to India


The US government has shut down for the first time in 17 years after the Congress failed to break a deadlock over the country’s debt ceiling. This puts nearly 800,000 US government employees out of work temporarily.

In a globalised world, where economies are becoming more linked, ripples of a shutdown of this sort will be felt everywhere.

Here is a look at its impact on India:

NO DIRECT IMPACT FOR NOW: Analysts insist that the shutdown is only partial costing $300 million a day. Essential services, and those departments which earn revenues from customers, will continue to work. The shutdown is mainly going to impact national parks, and departments like internal tax and environmental protection. These do not directly affect India.

VISA ISSUANCES COULD BE HURT: However, if the shutdown continues for over a fortnight, there will be a visible impact. The first to be affected could be visa issuances. This will pinch Indian IT companies, which regularly send employees for work on overseas projects.

MARGINAL OR NO IMPACT ON IT COMPANIES: A prolonged shutdown could impact US business environment. During such times, companies could become hesitant in giving new orders or planning new investments both within and outside the country. A marginal impact is likely on Indian businesses that service the market. US accounts for 60% revenue that Indian IT services firms generate annually. Nasscom, the IT sector industry body, clarified on Tuesday that most Indian companies service private companies in US and not the Federal government.

STREET ON THE EDGE: If the US does not raise its debt ceiling by October 17, it won’t be able to borrow money to pay bills that have already been approved. The US will then default the first time, which will be catastrophic for the world economy. Credit rating agencies have yet to issue any significant warnings that could affect global capital flows. Traders in India would have to be careful and perhaps brace for a volatile stock market trading sessions.

CURRENCY VOLATILITY: Until the US Congress manages to break the dead-lock, financial markets worldwide will be cautious. Money could move out of US treasury and create volatility in financial markets as money is rapidly pulled out and put in markets. This could increase volatility in the currency markets. The Indian rupee is vulnerable in such a situation. It could rally in the short-term and fall when the crisis is resolved.

READ THESE AS WELL:

Basics explained: What happens when the US Government shuts down

U.S. govt shuts down as efforts to break logjam fail

The Last Government Shutdown Caused The Monica Lewinsky Scandal

Apart from dollar, most investors keep cool about U.S. shut down

This work is produced by Simplus Information Services Pvt Ltd. Customer engagement through content.

Like this article? Click here for more articles from the same provider.

Latest News

  • China investors top U.S. list of 2013 national security reviews

    Chinese investors faced more scrutiny from a U.S. national security watchdog than those from any other country in 2013, the Obama administration said on Thursday in a report. The report could add to tensions between Washington and Beijing as they negotiate a bilateral investment treaty. China's companies feel they are singled out by Washington, which counters it doesn't discriminate against any country and the increase in reviews of Chinese investors reflects higher investment flows from …

  • Global equities fall as oil sinks; dollar rallies
    Global equities fall as oil sinks; dollar rallies

    Global equities dipped on Thursday as investor enthusiasm was dampened by a pullback in oil prices related to rising inventories, while the dollar rose as economic data drove expectations that the Federal ... …

  • Oil price slump threatens Malaysia's oil ambitions

    A collapse in oil prices is making it harder to attract investment in the next phases of a plan to build one of Asia's biggest energy hubs on Malaysia's southernmost tip, a development estimated to be worth over $50 billion. The Pengerang Integrated Petroleum Complex (PIPC) aims to help Malaysia compete with Singapore to become the region's top oil and petrochemicals hub, but the local government body coordinating the project said the environment was now clearly tougher. State oil firm …

  • Citi urges Europe's CEOs to follow U.S. share buyback trend

    Citi strategists on Thursday urged European firms to use historically cheap borrowing costs to buy back their own shares, a practise embraced by U.S. companies in recent years that has also attracted criticism. What European companies should do with their trillion-dollar cash pile in a world of rock-bottom interest rates and cheap central-bank money has become a hot topic for investors, as carrying cash on balance sheets becomes costlier while borrowing funds for everything from mergers to …

  • China machinery firms turn bankers, tractor makers as wheezing economy …

    Chinese construction machinery makers are opening banks, designing tractors and abandoning core business deals in an effort to diversify and stay profitable as China's sputtering economy brings a sustained downturn to a once-booming market. Encouraged to expand after Beijing fired up a $640 billion stimulus package seven years ago to help them beat the global financial crisis, manufacturers from Zoomlion Heavy Industry Science and Technology Co (1157.HK) to Sany Heavy Industry Co are stuck …

  • GM's Indonesia closure highlights automakers' emerging markets woes
    GM's Indonesia closure highlights automakers' emerging markets woes

    General Motors Co's (GM.N) decision to shutter a car factory in Indonesia comes as global automakers rethink the timing and scope of investments in emerging markets once touted as engines of growth. Global automakers poured billions into Brazil, Russia, India, China and other emerging markets during the past few years. …

  • Oil retreats as rising U.S. inventories continue to weigh
    Oil retreats as rising U.S. inventories continue to weigh

    Crude oil futures fell sharply on Thursday as rising inventories in the United States pressured both Brent and U.S. contracts and countered expectations for recovering demand. While Brent losses were tempered ... …

  • New York Daily News may be put up for sale - memo

    Zuckerman said in the memo dated Feb. 26 he was approached about his interest in selling the tabloid. …

DON'T MISS

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    367.30-3.50-0.94%
    INFRATEL.BO
    18.45+0.40+2.22%
    UNITECH.BO
    25.75-0.30-1.15%
    SUZLON.BO
    24.30-0.65-2.61%
    SPICEJET.BO
    135.70-3.50-2.51%
    TEXRAIL.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    18.36+3.06+20.00%
    INTLNKP.BO
    28.80+4.80+20.00%
    SKPSEC.BO
    30.00+4.55+17.88%
    PVVINFRA.BO
    120.10+17.00+16.49%
    GARNETINT.BO
    283.50+39.40+16.14%
    SANCTRN.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    64.20-15.80-19.75%
    KHOOBSURAT.BO
    9.16-1.24-11.92%
    GTNTEX.BO
    62.00-8.00-11.43%
    CNSDSEC.BO
    28.100.000.00%
    NOUVEAU.BO
    44.95-5.00-10.01%
    HRYNSHP.BO

QUOTES

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.