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

  • Google updates maps with traffic alerts

    Washington, May 24 (ANI): Google has updated its maps with a traffic alerts feature that brings explanations as to why various routes will be faster. …

  • Pacific free-trade talks "in the end-game" - U.S. trade official

    The United States is optimistic a deal to set up a free trade zone across the Pacific will be concluded soon, with sensitive issues likely to be ironed out when its Congress resumes sessions, the top U.S. trade official said on Sunday. "We are very much in the end-game," U.S. Trade Representative Michael Froman told reporters after a two-day trade ministers' meeting on the Philippine island of Boracay. "Our negotiators are working as we speak, and working through issues, we hope to conclude …

  • 25 achievements, 25 challenges (To Go With: Return of 'feel good factor' …

    The following are a set of 25 key achievements of Prime Minister Narendra Modi government in the past one year, as listed by stakeholders and analysts, and an equal number of challenges that need to be ... …

  • G7 finance ministers to address faltering global growth
    G7 finance ministers to address faltering global growth

    Figures due on Friday from the United States that will almost certainly show the world's biggest economy contracted last quarter are also likely to feature. "With the negotiations between Greece and the rest of the euro area at an impasse, an impatient German Chancellor Merkel has warned that an agreement must be reached before the end of the month," said Thomas Costerg, senior economist at Standard Chartered. Greece cannot make a payment to the International Monetary Fund due on June 5 …

  • Return of 'feel good factor' for Indian economy

    New Delhi, May 24 (IANS) Recent reviews of global institutions and the prevailing investor confidence suggest a striking change in the perception about the Indian economy cover the past year. IANS spoke to a host of stakeholders and analysts over the past week and this is report card on the overall performance of the government since it was inaugurated on May 26 last year under Modi after a dramatic win for his Bharatiya Janata Party (BJP) in the national elections. It gave India a …

  • Global burger joints want no beef with India

    New Delhi, May 24 (IANS) International burgers eating into India's spicy street food market have bulged over the past decade. Wendy's, the world's third largest hamburger conglomerate after McDonald's and Burger King, joined the battle for the Indian palate earlier in May. But the Ohio-based firm, in a public display of nerves, replaced its never-frozen, North American beef with socially-acceptable chicken and mutton burgers and six vegetarian offerings to boot. Earlier this year, Maharashtra …

  • If you read Playboy for articles, you'll love this non-nude-app on iPh …

    London, May 24 (ANI): A new Playboy app has managed to get past Apple's strict nudity code because of its workplace-friendliness. …

  • Narcissistic or neurotic? What your Facebook updates say about you

    London, May 24 (ANI): A team of researchers has revealed what Facebook updates say about the users. …

DON'T MISS

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    282.45-6.90-2.38%
    SBIN.BO
    26.10+3.10+13.48%
    PUNJLLOYD.BO
    25.05-0.25-0.99%
    SUZLON.BO
    11.89+0.60+5.31%
    RENUKA.BO
    14.15-0.15-1.05%
    UNITECH.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    14.250.000.00%
    GSS6.BO
    49.250.000.00%
    PENIND4.BO
    468.00+78.00+20.00%
    DFM.BO
    272.40+45.40+20.00%
    RUPA.BO
    92.47+15.41+20.00%
    MANVIJAY.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    538.150.000.00%
    UPL6.BO
    862.000.000.00%
    YESBANK6.BO
    209.70-52.40-19.99%
    INFINITE.BO
    58.10-14.50-19.97%
    SMADL.BO
    95.70-23.00-19.38%
    RISAINTL.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