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Industry chambers feel India's growth estimate for 2011-12 will hover around 8 per cent, despite the downgrading of US credit rating by Standard and Poor's on Friday.
However, while the short-term impact would be in terms of market uncertainties…an uncertain global environment could depress India's exports and knock off percentage points from India's GDP growth, FICCI said.
In a similar reaction, Mr Salil Bhandari, President, PHD Chamber of Commerce & Industry, said, “India is expected to be able to maintain a comfortable growth trajectory of 7.5-8 per cent supported by strong domestic demand.”
Assocham, however, said the US downgrade could potentially slow down foreign direct investments into India.
“The IT industry too will feel the heat as uncertainty and negative sentiments blow across global businesses,” said Mr D.S. Rawat, Secretary-General of the chamber, said.
Mr Rawat said weakening global equities could put pressure on the Indian rupee. The Reserve Bank of India will need to maintain sufficient rupee and foreign currency liquidity to prevent any excessive volatility in local markets, he added.
On the upside, FICCI felt that a possible decline in crude oil prices could signal a pause in RBI rate hikes, buoying investor sentiments.
Additionally, the spreads between a US sovereign and Indian sovereign paper of comparable duration may decline, thus enabling FII inflows into the country, sobering current account deficit.
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