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

  • Oil slides 2nd straight day as glut worries return
    Oil slides 2nd straight day as glut worries return

    Oil prices fell for a second day on Tuesday, retreating further from the year's highs hit last week, as rising output renewed worries about the global glut of crude, the U.S. dollar rebounded and equity markets weakened. "There are enough supply stories out there to slow or temper any gains," Energy Aspects analyst Richard Mallinson said, adding that the only upside came from the possibility of longer-term U.S. production declines. Brent crude futures were down 80 cents, or 1.7 percent, at …

  • Lower ad sales, higher costs pull down New York Times profit
    Lower ad sales, higher costs pull down New York Times profit

    The New York Times Co's adjusted operating profit fell 13 percent in the first quarter as ad sales declined in its print and digital businesses and costs rose. Shares of the publisher, which is spending ... …

  • Liberty House Group confirms bid for Tata Steel UK

    Metals group Liberty House confirmed on Tuesday it had formally submitted a letter of intent to buy the British assets of Tata Steel. Liberty reiterated that it plans to shift Tata Steel UK's operations ... …

  • Wall Street down sharply amid growth fears, oil slide
    Wall Street down sharply amid growth fears, oil slide

    Activity at China's factories shrank for 14 straight months in April as demand stagnated, a private survey showed. Oil prices dropped about 2 percent as rising output from the Middle East renewed concerns about global oversupply. The CBOE Volatility index, often called Wall Street's fear index, rose 9.2 percent to 16.03. …

  • Slowing Indian sugar exports to boost Thai, Brazil sales in Asia

    An expected slowdown in Indian sugar exports as domestic prices surge, will boost the market share of Thai and Brazilian sugar in Asian markets, traders said on Tuesday. India will soon scrap an order that requires sugar mills to export excess supply, two government officials said on Monday, after back-to-back droughts look set to turn the country into a net importer next season and open the door to rival suppliers. Traders said the news came as little surprise as many had expected that …

  • Jindal brothers agree on power plant deal - sources

    Indian billionaire Sajjan Jindal's JSW Energy Ltd has all but agreed to buy a 1,000 megawatt power plant from his brother's heavily indebted Jindal Steel and Power Ltd in a deal valued at over $900 million, two sources told Reuters. JSW and Jindal Steel officials have been meeting in New Delhi and Mumbai over the past weeks. A last-minute disagreement over valuation forced JSW to cancel a scheduled news conference last week, according to one of the sources. …

  • Gold rises around $1,300/oz on weaker dollar, fund inflows
    Gold rises around $1,300/oz on weaker dollar, fund inflows

    Gold rose to around $1,300-an-ounce on Tuesday as the dollar and European shares fell, triggering further investment in physically-backed gold funds. The metal has rallied around five percent over the past few sessions to a 15-month high on Monday after the Federal Reserve's cautious stance towards higher U.S. rates, as well as a soaring yen, weighed on the dollar. Spot gold climbed 0.3 percent to $1,294.96 an ounce by 1143 GMT, after earlier hitting a session high of $1,302.00. …

  • Big pharma dominates ranking of stocks with best 5-year returns

    U.S. pharmaceutical companies dominated an annual global ranking of top 10 large-cap stocks with the best five-year returns, according to an analysis released on Tuesday by Boston Consulting Group. Drug company Regeneron Pharmaceuticals, which had an average annual total share return of 75.3 percent, was the top performer. Allergan and Gilead Sciences, with 43.3 percent and 41.4 percent average annual returns, respectively, took second and third place. …

DON'T MISS

  • "The system is becoming more and more reliable"

    Ajay Bhushan Pandey, DG and Mission Director, UIDAI, spoke to Business Today on Aadhaar enrolment crossing the one- billion mark. …

  • Aadhaar's Identity Crisis

    Aadhaar enrolments have crossed a billion. But will the project make the desired impact on the ground? …

  • Keepers of the Law

    Mumbai-based Complykaro is helping companies comply with laws related to sexual harassment at the workplace. …

  • Costly Setback?

    SKS Microfinance's failure to win a small finance bank licence, even as its competitors got them, is likely to hit its growth prospects hard. …

  • Price-less

    The Mi 5 is a power-packed flagship smartphone with the best of features and comes at an unbelievable price. …

  • Impeccable

    Be it display, usability, camera or sound quality, the 9.7-inch iPad Pro is a spectacular tablet, but comes at a high price. …

  • Honey, i(Phone) Shrunk the Screen!

    Apple has relaunched a 4-inch iPhone in a market flooded with big-screen phones. Will this bring smaller screens back on the shelves? …

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    15.02-0.48-3.10%
    SUZLON.BO
    74.800.000.00%
    SPICEJET.BO
    110.05-0.75-0.68%
    VEDL.BO
    69.75+2.10+3.10%
    IBREALEST.BO
    46.35+0.10+0.22%
    STAMPEDE.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    81.10+12.35+17.96%
    EMMBI.BO
    42.10+5.60+15.34%
    ANANTRAJ.BO
    12.30+1.40+12.84%
    KARNAVATI.BO
    39.50+4.00+11.27%
    NOL.BO
    117.60+11.80+11.15%
    BGRENERGY.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    15.20-3.80-20.00%
    RCRL.BO
    18.50-3.75-16.85%
    CEREBRAINT.BO
    10.70-2.05-16.08%
    SATINDLTD.BO
    14.80-1.60-9.76%
    GLXYENT.BO
    287.90-30.80-9.66%
    TVSMOTOR.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.

Yahoo Cricket