The sovereign downgrade of the US, first in the last 70 years, has been something analysts and economy watchers have been expecting for sometime now, especially after discussions on raising internal debt ceiling limit began to falter.
The US dollar is now expected to depreciate, leading economists concur, but, unlike during 'normal times', this would have a beneficial impact for India.
This is because the 'new normal' would see the falling dollar bring international commodity prices also down. In normal times, the impact would just be the opposite; cheaper dollar turning asset classes traded in the greenback affordable to aspire for, driving up their prices in the local currency.
But the 'new normal' is such that the downgrade would lead to interest rate hikes in the US and slow down the investment cycle there, badly impacting demand for commodities including crude oil.
Lowered international commodity prices would be the best thing for India to happen, since the inflation bugbear stomping around the economic landscape has been feeding on what has come to be known as 'imported inflation'.
This is different from the outlook for the rest of the Asian countries which have been net exporters to the US and who have built up enormous amounts of US Treasuries. China, with an estimated $1.1 trillion, leads the pack, followed by Japan, Taiwan and Malaysia.
Cheaper crude oil and commodity prices would also help bring down India's current account deficit and by extension fiscal deficit, in a replay of year 2008 when the global recession started unravelling.
The flipside is that a likely slowdown in trade flows would mean drying up of a resource that would go to fill India's burgeoning current account deficit (around 2.5 per cent of the GDP as of now). But, again, these are just not normal times, the economists aver.
They were also of the view that it is too early to take a call on the country's growth rate, projected latest at 8.2 per cent by the Prime Minister's Economic Advisory Council, being impacted.