NEW DELHI, Sept 4 (AFP): India should escape major fallout from the US subprime credit turmoil thanks to its largely insulated economy but the country's outsourcing sector has cause for concern, economists said.
While the nation of 1.1 billion people has been gradually easing rigid state controls on trade and investment and opening up its economy, it remains far less exposed to global financial upheaval than many countries.
Global financial markets have been volatile in the last few weeks amid concerns about the shaky US subprime sector of housing loans to customers with bad credit histories.
That has led financial institutions worldwide to examine their investment risks and plan for any possible long term fallout, including heavy losses, from once investing in bad debt.
India, however, appears to be in a strong position to withstand aftershocks.
The country has "largely a domestically driven economy with limited trade dependence," said Mumbai-based Edelweiss Capital brokerage economist Manika Premsingh.
In addition, India's banking sector is not directly exposed to the subprime woes that have upset global markets, unlike some banks in Britain, Germany and elsewhere, economists note.
"The direct and indirect exposure of the Indian banking sector to the subprime woes is limited and does not pose a threat to either the local banking system or to the economy," said JP Morgan economist Rajeev Malik in Singapore.
But worries persist that the crisis has not blown out. Late Friday, US authorities moved to reassure investors they would protect the economy from the subprime troubles.
Indian economy seen escaping subprime fallout
FE Team | Published: September 05, 2007 00:00:00 | Updated: February 01, 2018 00:00:00
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