The economic slowdown in China has widely affected India. India has to deal with some disturbing issues as the result of the Chinese stocks falls. However, India keeps focusing on real actions to reduce the distressing impacts.
In certain aspects, India is closely related to Chinese economy. No wonder if many Indian companies are struggling to deal with the sluggish growth in Cina. Hindustan Times has mentioned that the worsening economy in China has cut down the demand for Indian goods in China. There are also increasing costs in servicing dollar debt because of the pressure in Indian rupee.
Since August last year, Chinese yuan has dropped around 6%, triggering a worse trade discrepancy. One of the results that have benefited the global economy in one side is the lower price of crude oil, eventhough there is also an oversupply factor. This is good news for the Indian crude oil importers. Meanwhile, the Indian exporters are facing the opposite facts.
Failures in Chinese stock performance are not much better. In order to control the financial markets, Chinese market regulator had forbidden people with more than 5% shares in a company to sell their stocks in six month starting from July last year.
More than 1,000 companies stopped their trading activities. However, there is a buzz that the regulation will be lifted due to the poor data of manufacturing. Chinese market knocked down severely, decreasing its $2.5 trillion wealth. Even the $20 billion market injection by the authorities was unable to do much favor.
The Indian rupee has weakened against dollar, and the euro and other currencies have been worse. The Indian export markets are still facing hard times. India has to deal with the uncertain integrated world economy, and needs to focus on the reachable action, encouraging investments and creating more jobs, cutting red tapes, and the nearest important step is the next month's Budget.
Moreover, India is predicted to be the fastest-growing country in Asia in 2016 together with Vietnam, according to DW. The Indian growth in 2015 was 7.3%, and in this coming year, it is expected to reach 7.6%. With its large dependancy on imported oil and gas, India is the strongest survivor against the fall down of global oil and gas prices. India has been able to cut down the fuel import costs, thus lessening the deficit drastically.
This has resulted in a more under controlled inflation, and ensures the Reserve Bank of India cut the interest rate by 125 bps, as stated in The Street. However, the Prime Minister Modi has suggested not expecting any other cuts before the next month budget presentation. He has mentioned that the budget has to integrate monetary consolidation.
When there is stability in fiscal policy, there will be healthy earnings, which mean that there is also a law making progress by the Parliament. That could be a good indication to get into the market, which will promote more benefits for India.
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