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

  • Prada 2014 profit falls for first time since listing as China, Europe  …
    Prada 2014 profit falls for first time since listing as China, Europe  …

    Italian luxury goods company Prada SpA reported its first drop in annual net profit since it listed in Hong Kong four years ago, as growing retail sales in the Americas and Japan failed to offset declines in Greater China and Europe. Like other luxury goods makers, Prada has seen weaker sales in China and Hong Kong amid a government crackdown on corruption, including bribery which often takes the form of lavish gifts to officials. Rival LVMH, which sells a wide range of luxury goods including …

  • MRPL seeks rare low sulphur fuel oil for May

    Mangalore Refinery and Petrochemicals is seeking a rare cargo of low sulphur fuel oil (LSFO) to meet pollution standards of Karnataka, a southern Indian state, a company source said on Monday. MRPL needs to stay under maximum sulphur limits on domestic production, "which would necessitate a LSFO import", said a Singapore-based fuel oil trader. Trade sources said the LSFO purchase could also be the result of refinery upgrades that have reduced MRPL's fuel oil production. They are an exporter …

  • Asia shares swing higher as China nears 7-year high
    Asia shares swing higher as China nears 7-year high

    Asian stock markets rose on Monday, with China stocks nearing a seven-year peak on hopes for more infrastructure spending and policy stimulus, while oil prices suffered further from excess supply. The Hang Seng China Enterprises Index also added 3.5 percent after China allowed mainland mutual funds to buy Hong Kong stocks. After some early dithering, Japan's Nikkei firmed 0.8 percent, helped by talk of demand for the new quarter and financial year. MSCI's broadest index of Asia-Pacific …

  • Exclusive - Warburg Pincus seeks $12 billion private equity fund

    Private equity firm Warburg Pincus LLC has told investors it will seek to raise a new $12 billion global fund, just two years after amassing a $11.2 billion fund, according to people familiar with the matter. The fundraising comes as other private equity firms such as Blackstone Group LP and Silver Lake Partners LP take between four to six years on average to spend their investors' money in global funds of similar size. Private equity investors, which usually include public pension funds, …

  • Sensex up 255 points; bank stocks gain

    Mumbai, March 30 (IANS) A benchmark index of Indian equities markets, the 30-scrip Sensitive Index (Sensex), made healthy gains in the early morning session on Monday. It was trading 255 points or 0.93 ... …

  • Ford revives the Lincoln Continental, aims at U.S. and China
    Ford revives the Lincoln Continental, aims at U.S. and China

    Ford Motor Co will resurrect the Lincoln Continental as its top-of-the line luxury sedan, betting the classic name will help rebuild the brand's image in the United States and China. Ford's Lincoln will ... …

  • Ralph Lauren to get $3.2 million from Indian licensee Arvind in settle …

    REUTERS - Textile maker Arvind Ltd said on Monday its lifestyle brands subsidiary would pay $3.2 million to Ralph Lauren to settle a lawsuit the US-based luxury fashion house filed in 2013. The Club Monaco ... …

  • Hong Kong retail rents drop as Chinese shoppers stop
    Hong Kong retail rents drop as Chinese shoppers stop

    A drop in Chinese tourist numbers is driving down shop rentals in Hong Kong, with vacancies increasing in the same prime areas that just three years ago pipped New York's Fifth Avenue to become the world's most expensive retail real estate. Spooked by months of cross-border tensions and pro-democracy protests, tour groups visiting Hong Kong from China plunged about 80 percent this month, dealing a blow to the retailers that had built their businesses around these mainland visitors' once …

DON'T MISS

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    27.55+0.85+3.18%
    SUZLON.BO
    184.50+16.60+9.89%
    IDFC6.BO
    16.350.000.00%
    UNITECH.BO
    21.45+1.30+6.45%
    SPICEJET.BO
    24.90+0.35+1.43%
    JPASSOCIAT.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    120.70+108.63+900.00%
    ARISINT.BO
    140.00+126.00+900.00%
    ZPPOLYSA.BO
    30.00+12.70+73.41%
    GSS6.BO
    62.25+12.00+23.88%
    PENIND4.BO
    16.25+2.70+19.93%
    SANJIVIN.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    17.95-107.55-85.70%
    MANAKINDLTD.BO
    17.95-107.55-85.70%
    MNKALCOLTD.BO
    17.95-107.55-85.70%
    MNKCMILTD.BO
    30.00-95.50-76.10%
    MANAKSTELTD.BO
    336.30-101.00-23.10%
    UPL6.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.