Economists, exporters differ on possible impact of Scotland voting Yes

Impact, if any, would have come from exchange rate volatility and fund flows, says CARE

Exporters and economists differred on what would have been the impact on our merchandise trade if the Scottish referendum result had gone the other way.

The impact, if any, would have come  from exchange rate volatility and  fund flows, felt CARE Ratings' chief  economist Madan  Sabnavis.  The new currency  of  Scotland would  have been  benchmarked to  the pound but the latter would have fallen against  the dollar and euro,  he  said. Still, as most  of India's trade  is in dollars  and euros, the impact wouldn't have been much.  

Britain constitutes almost three per cent of India's total exports and 1.5 per cent of our imports.

"It is status  quo now," said YES Bank chief economist Shubada  Rao when asked about the impact of Scotland's decision. Sabnavis agreed.

Ajay Sahai, director-general  of the Federation of Indian Export  Organisations, said  there would have been an impact if  Scotland had decided to quit from the UK. "The  impact would have come  not only from exchange  rate movements but through a  whole  lot of  uncertainty the decision would have  unleashed, not  only on the UK but also the entire Europe," he said.

The demand  for  goods would have come  down,  as it would have created  uncertainty in the minds  of people about such  a decision on the  economies and employment, he said. "It's a good decision. Now,  it will not have any effect on the trade," Sahai said.  

 
The rupee trimmed its initial gains, ruling higher for a fourth day, moving up another two paise to 60.82 against the dollar, on persistent selling of the greenback by banks and exporters in view of a weaker dollar abroad.