India Inc says Fed taper a non-event

Indian chief executive officers (CEOs) do not expect the Federal Reserve's tapering to make any difference to the economy or to their fund-raising plans. According to them, the tapering might result in a short-term volatility of Indian currency and stock market.

"The tapering announced on Thursday may cause some short-term volatility of rupee and stock market but it will get balanced in the long run. Since Fed has not announced any interest rate change or sequential tapering, one need to watch situation closely, as the Fed and Indian government may also be doing," said Praveen Sood, Group CFO, HCC.

CEOs say India is now definitely in a better position to manage its Balance of Payments (BoP), as the government and RBI have taken effective steps to build up forex reserves and render stability to the foreign exchange market.

Ficci President Naina Lal Kidwai said, "The recent trends clearly indicate the current account deficit (CAD) for this financial year would narrow down to less than $50 billion, well within sustainable limits."

The US Federal Reserve announced it would continue to purchase securities at the rate of $75 billion a month than the earlier level of $85 billion.

CEOs say India had unveiled a slew of measures between May and September to stem capital outflows and stabilise the rupee. The government clamped down on gold imports to control CAD that hit a record high 4.8 per cent of gross domestic product in the current financial year. But gold import curbs, along with a rebound in merchandise exports have helped narrow the deficit to 1.2 per cent in the last quarter.

The Indian government is also talking with JPMorgan and others to gain entry to benchmark indices for emerging market debt in hopes of attracting billions of dollars in investment that could act as an insurance against any external shock.