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The Finance Minister Arun Jaitley said on Wednesday that any US Federal Reserve move to hike interest rates in mid-December may not leave India unscathed.
"I can’t say that Indian economy won’t be impacted by any US Fed move. There are some crisis situations that impact us much lesser and some directly. Therefore if US Fed rate hike happens certainly you will see turmoil for some period of time and things will settle down", Jaitley said while addressing corporate leaders at an event organised by World Economic Forum and Confederation of Indian Industry here.
Jaitley was responding to a question from WEF Founder and Executive Chairman Klaus Schwab on how he sees the likely US Fed rate hike in December impacting India.
"Impact (if US Fed rate hike happens) will certainly be there. Rather than the actual change, it is the suspense that has been impacting us for the last few years", he said.
Jaitley highlighted the significant change in international situation and pointed out that the earlier trend of crises breaking out once in a decade or fifteen years has now changed.
"The world is so integrated that the newest norm in the global economy is turmoil. It could be due to Greece (payment crisis), Chinese slowdown and currency devaluation, US Fed rate expectation. So you have it every now and then", he said.
India’s strategy in this backdrop would be to stay focused on strengthening its economy and enhance the macroeconomic strength so that the impact of this (any US Fed rate hike) is only transient, Jaitley said.
Jaitley noted that every macroeconomic parameter was now fitting well for India given the kind of "fiscal prudence" practised by the Government.
As regards quota reforms in World Bank and International Monetary Fund, Jaitley said that the ball was now in the court of the United States itself.
"The US treasury secretary has been saying that he is extremely keen to do it and trying within his domestic system to have it cleared”, Jaitley said.
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