Indian economy is better placed than its peers.
By Sreekanth A Nair
Fitch, the US rating agency, said that India will not be affected by the potential economic irregularities on account of interest rate hike by the US Federal Reserve. Instead, the favorable economic outlook of the country makes it an attractive investment destination for foreigners, it said, on Wednesday.
“India is not immune to potential general emerging market jitters related to the Fed lift-off, but it is better placed than many of its peers for a number of reasons,†said Thomas Rookmaaker, Director, Sovereign Ratings, Fitch Ratings.
Unlike many of the emerging markets, India’s less dependence on exports and improved external balances makes it a remarkable economy.
“India’s favorable economic growth outlook makes India relatively attractive for foreign investors,†Rookmaaker added.
The US Federal Reserve increased interest rates by 0.25 percent, reflecting the improved US economy after almost a decade-long economic slowdown.
The current scenario will likely make the Reserve bank of India (RBI) shift focus to domestic parameters.
Fitch is of the view that India’s external balances have shown significant improvement from 2013 to 2015 and current account deficit is narrowing. Foreign exchange reserve has increased by $65 billion to $ 353 billion from 2013 to 2015.
Above all, an expected growth rate of above 7 percent makes India one of the fastest-growing economies in the world, which will definitely reflect in the investment behavior of foreign investors.