'Make in India to aid native economic growth index'

The School of Management, Manipal University, organised a guest lecture on ‘Current US Economic Climate’, led by a delegation of academicians from Carl H Lindner College of Business, University of Cincinnati.

Nicholas Williams, head, Department of Economics, and Michael Neugent, academic director of MS Finance program, Raj Mehta, professor of marketing and director of university honours programme at the University of Cincinnati interacted with students on the effects of the US monetary policy on other countries, especially emerging-market economies like India.

Williams spoke on the current economic condition in the US – including the inflation rates, unemployment rates and duration. He made a comparative analysis of the growth indexes of India, China and the US. “The current growth rate of the Indian economy is quite remarkable and truly reciprocates with the efforts of the current Modi-led government. The ‘Make in India’ strategy can truly drive the growth index of the economy in the coming years,” he stated.

The professor then reminded the students that it was a crucial time in the US, as the important policy decision on the Federal Reserve rates was to be taken in the following days.

“It is expected that the base points will increase by 25 points. The Federal Reserve had slashed earlier the federal funds rate – the interest rate at which banks lend to each other or borrow from the Fed itself – to nearly nothing amid the financial crisis in 2008 as the nation fell into recession. This was done so that businessmen could take loans from the US banks at zero interest rate and invest in business. By lowering the cost of borrowing money, the Federal Reserve aimed to stimulate lending by the banks and therefore economic growth,” he explained.

Williams reiterated that the US dollar sits at the centre of the global financial system and any decision by the Federal Reserve can cause ripples throughout the global economy.

“While slowing down of the Chinese economy has already rattled markets worldwide, a rate hike in the US could come as another setback for emerging economies such as India. A strong dollar has always meant bad news for these economies since global capital may start flowing back into US treasury bonds. And if FIIs in debt markets rush to pull out following a possible Federal Reserve rate hike, that could end up putting pressure on the Indian rupee,” he said. Michael Neugent spoke about the newly established collaborative engagements between Carl H Lindner College of Business, University of Cincinnati, USA and SOM, Manipal University, including student exchange, joint research and strategic partnership.