(ET)
Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said global slowdown, trade and geopolitical tensions currently pose major downside risks for the Indian economy, while volatile crude prices also have the potential to increase the country’s current account deficit.
“Overall the outlook for India’ external sector is one of cautious optimism, albeit with some downside risks accentuated at this juncture”, Das said at an event here. Listing the risks, Das said that deepening of the global slowdown and escalation of trade and geopolitical tensions appeared to be the most significant.
Das, however, also noted that there are underlying economic strengths that can be built upon to act as buffer to these risks. The search for new export and niche markets must go on so as to reap the benefits of the changing dynamics of global value chains, he added.
The Governor also said that Indian IT companies need to accelerate market diversification and invest in new skills and technologies to hone their comparative advantages. Remittances and non-resident deposits are likely to remain shock-absorbers over the medium term and need to be assiduously cultivated, including by ease of remitting and depositing, as well as reducing transaction costs, the Governor noted.
