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Q&A: India's economy unlikely to be hit by Brexit

The RBI has enough reserves to handle and curb swings in currency movements.

How will Brexit impact the Indian economy?

India has a very resilient economy, we are a very broad-based economy... We are not dependent on any one sector. Most of our growth comes from domestic consumption, which won’t be impacted by Britain coming out of the EU. The Indian economy won’t be affected.

There is a fear FIIs will withdraw money from India after Brexit?

Why should FIIs withdraw money from India? There should be some good reasons for that. They have come to India because of the strength of the Indian economy, not the British economy. We are working to make the Indian economy much stronger, and if we do that there will be no need for FIIs to leave the country.

Do you think the Indian rupee will see huge volatility?

I don’t think there will be any significant effect on the rupee, it will have much more impact on the pound. But if there is any effect, the RBI can act to dampen that. The RBI has enough reserves to handle and curb swings in currency movements. I don’t see any major swings in the Indian currency... Sentiments may have some effect, but I don’t see any logical or good economical reason for any swing in the Indian currency.

Will Indian companies need to relocate from the UK after this referendum?

I don’t think they will relocate. I think many firms are there for the UK market, that will not change at all. Other companies are there to cater to the world market, that will not change either. That part which is there to trade with the EU — depends on what the terms of exit from the EU are. If the terms are favourable, there is no need to change the approach or strategy. I don’t think this is going to lead to any big exit of firms away from the UK.

Will exports to the UK or other countries be impacted if they start raising trade barriers after this?

I don’t believe that. The only change is going to be on the exchange rate. If you are a manufacturer in UK, the change in exchange rate will help, if you are an importer to the UK, it will hurt.

Do you think it is the right time for deprecation?

I have always been a supporter of a weaker rupee.

Is this the right time to cut interest rates?

Industry would love low interest rates, but at the same time we also want to see inflation under control.

( Source : Deccan Chronicle. )
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