How External Factors may Impact on Upcoming Indian Financial Market

The year of 1991 marked a new beginning of the Indian economy downturn. The earlier rigid model was repealed with the introduction of ‘Globalisation and Privatisation’ in various sectors. The then Finance Ministry, under the leadership of Dr. Manmohan Singh, envisaged the forward-looking step which was approved by the Government under P.V. Narsimha Rao’s leadership. In the simpler language, the Indian economy was opened for the inflow of foreign investment, and thus, License Raj was abolished. India saw a new dawn in the global market, and domestic companies started competing in the international market.

With the slowdown after the 2008 crisis, India regained the process of  recession under the new reformative policies and government initiatives. The recently held ‘Make in India’ week in Mumbai brought billions of investment in the country. As aspiring by many leaders, India is seen as one of the fastest growing economies in the global market, and ideal destination for foreign direct investment. But, the Indian financial market is not independent from the influence of the external factors such as war, economic crisis and turmoil, etc. The world witnessed a global financial accounting services in delhi crackdown after the 2008 crisis. Various developed countries underwent the severe financial depression, and India, i.e. a developing country, could not escape from its effect. Recently, after the state sponsored capital punishment by Saudi Arabia of an Iranian cleric escalated the already flaming sectarian violence in the region. The diplomatic relations between Iran and Saudi Arabia were on a standstill, which impacted various global economies because both countries are the largest exporters of  oil. Such other reasons, especially upcoming presidential elections in the United States America, would have a deep impact on the Indian financial market.

The Indian interest has exponentially grown to West Asia. The Indian markets are dependent upon the export of crude oil  and natural gas  by the Middle-East countries. Any geopolitical conflict thereat has a direct impact upon the rise in prices of crude oil. With the lifting of sanctions from Iran, after the successful negotiation between P5+1 countries and Iran, Indian interest has grown. The payment mechanism will be common, and future endeavours can be initiated with its entrance in the global competition. The growing Indian market has vast interest in trade and commerce, and the visionary Nuclear Deal has served the Indian interest. India is a heavy importer of oil from Saudi Arabia as well. The recent growing diplomatic relations between India and Saudi Arabia has made landmark achievements. Apart from economic interests, India also shares deep cultural and religious cooperation with these two countries. But, the recent crisis can possibly jeopardise many future projects which could be detrimental to the Indian interest. But, India must take a leading role as being a regional partner with both nations to resolve the crisis through diplomatic channels. This would definitely go in favour of India’s interest if dealt judiciously.

Eurozone crisis or the European Debt crisis also impacts the growing Indian economy. Indian engineering and mechanical sector could be affected by the worsening of the situation. The rapidly shrinking Greek economy needs a new life of recession. This could also avalanche the crisis in the various other European economies which in the end would result in affecting India’s economic interest. But, the Government of India has taken effective measures to deal with the crisis. The EU-India Summit will be held this year after the gap of four years. This would likely to bring up various stalled projects, and modes would be established to channelize the investment in a more business friendly atmosphere. The Hon’ble Prime Minister too is likely to deliberate upon the Free Trade Agreement that would surely enhance deeper and prosperous cooperation between the European Union and India.

The upcoming American Presidential elections scheduled in 2016, is closely watched around the globe. The international condemnation of Donald Trump’s Anti-migrant and Muslim policies has raised many eyebrows. The democratic nominees Hillary Clinton and Bernie Sanders are seen as ideal candidates to the Indian interest, but nothing can be predicted in the watertight race. The recent announcement to raise the H1B visa fee was a cause for concern for India, as the Indian IT sector has a deep interest in the American markets.  This policy would impair the IT professionals migrating from India to US for jobs. But, the policy is on a standstill, and Indian authorities too had taken a staunch stand on taking this issue to the international forum. All that can be hoped is that newly elected President of the World Power is tilted towards the Indian interest. The foreign policy of the present Indian Government has successfully managed to establish strong channels of communications and deeper cooperation between India and USA, but such bonds can be furthered only when no deterrent policies are adopted to hamper the Indian interest.

Terrorism is a global concern. Countries like Syria, Iraq and Pakistan, have become a breeding ground for terror activities. No country is independent of its effect.  India, being a neighbouring country, has a major impact from it. With frequent terror strikes due to state sponsored terrorism, India has suffered with the loss of human resource and infrastructure. The Indian budget has its huge spending in the defence sector, and is one of the largest importer of defence equipments. These abundant funding could be used in various developmental activities, but security is most imperative. Thus, the external factors of terrorism have  deeply impacted  the Indian financial sector. India has adopted various diplomatic channels to address this issue, but to no avail as it is still the victim of these barbaric activities.

Therefore, it is undeniable that the external factors have a deep impact on the Indian financial market.  The Indian market can  run efficiently only if these factors are considered and dealt diligently. India cannot establish as a global competitor in isolation, and hence it is essential to establish strong and effective diplomatic relations with the international community.

Source of content:- http://www.letscomply.com/knowledge-hub/2016/02/how-external-factors-may-impact-on-upcoming-indian-financial-market-2/