By: Shubham Ghosh
India’s chief economic advisor (CEA) V Anantha Nageswaran on Thursday (16) remarked that global uncertainty has been on the rise following recent developments in the US and governments, businesses and individuals should keep ‘margins of safety’ in matters related to fiscal, saving account planning and others.
According to him, the International Monetary Fund’s (IMF) global growth estimates of January looks outdated and nations will have to keep a watch on how the recent developments in the US would affect the confidence, bank-lending growth and other chain effects.
Two US banks failed miserably over the last week. While Signature Bank in New York, which lent mostly to the crypto industry, was closed by regulators after a run on their deposits, the failure of the Silicon Valley Bank left several startups, entrepreneurs, tech companies and VC funds anxious. The bank, the 16th largest in the US, was also closed by the California Department of Financial Protection and Innovation.
Speaking at the CRISIL (Credit Rating Information Services of India Limited) India Outlook Seminar, Nageswaran said countries need to live with the growing uncertainty not only this year but also the years ahead.
He said when facing uncertain times, the key thing to do is to make sure that there are margins of safety in operations — be it for corporates or investors.
“The only guidance one can think of is to allow for margins of safety, whether it is in fiscal planning, corporate planning or household balance sheet or savings account planning,” he was quoted as saying.
The CEA also said that the recent developments in the US create a necessity for the Federal Reserve to halt interest rate hike and thereafter, everyone has to keep a watch on what happens to the real interest rates in the US and what it would do to the US currency.
(With inputs from Moneycontrol, PTI)