Impacts of US Government Shutdown on World Economy and India Economy
President Donald Trump and Congress had declared Shutdown four weeks ago. It has been third shutdown in past two years and has adversely affected the economy of the country putting millions of workers on unsettled leave, obstructing medical research projects and closing national parks. The shutdown has hampered the economic growth of the nation and so far there are more than 800000 government employees who have not received their payment. Some of them are still on job to complete the essential functions. Lots of government servant doesn’t get a salary. So many government employees go on holidays. Still, the shutdown is going on after almost 38 days. This shutdown becomes longest us government shutdown in US federal government history. There were shut down in 1980,1981,1984,1986 for 1 day. In 1990 it was 3 days, From 1995 to 1996 there were 21 days and in 2013 it was 16 days shutdown.
The Story Behind:As per On December 11, Trump detained a televised conference with Speaker-designee Nancy Pelosi and Senate Minority Leader Chuck Schumer in the Oval Office and inquired them to provision an assumption of $5.7 billion for finance of a border wall. They denied, resulting in a disagreement among Trump and together Congressional leaders. During the antagonistic dialogue, Trump said, "I am proud to shut down the government for border security ... I will be the one to shut [the government] down. I'm not going to liability you for it ... I will take the mantle. I will be the one to shut it down." Schumer replied, "We shouldn't shut down the government over a disagreement."
Impact of the shutdown on USA economy:
There have been diverse estimate about the shutdown on the economic growth and GDP of USA. But the outcome of these discussions is that the shutdown is not at all good for the economy of USA. In the third week of January, Kevin Hassett, the chair of the White House Council of Economic Advisers said that the shutdown cuts quarterly economic growth by 0.13 percent point each week. It clearly means that after weeks now, the growth has been cut off by 0.5 percent as per White House's calculations. This shutdown has brought down dollar to the minimum value against a basket of currencies. Although the trading of dollar was weak in Asian market but there was pace in the European trade and the index fall down to 79.864, the lowest value since February 13. Dollar was trading at 80.05 but is still down 0.2 percentages.
Apart from a number of unpaid government employees and contractors, the public sector is also hampered a lot by the shutdown. The Securities and Exchange Commission has instructed companies planning in January to delay postpone their plans or at least put off high profile IPOs from the companies. All unsettled proceedings, except for emergencies at the SEC have to be on halt. The impact of this shutdown is on the airline companies as well. Major airline companies are losing business as there is decrease in the number of tourists. The shutdown has cut off the approvals of loan for small business administration and the business that need permission from the government entities and waiting for the end of the shutdown. Farmers are being hurt by the tariffs, are being further threatened by the shutdown.
How the US Government Shutdown Is Affecting Rest of the World:
The US Government provides employment to thousands of people across the globe; people who work at the embassies of US are the most common example. These people handle some of the vital work of the nation like security and other parallel domains are required to work throughout the shutdown without any payment. Although the government has announced that after the shutdown, they will be paid but for this duration they are using their savings for the basic requirements. With the shutdown, there is no job in USA so there is decrease in visitors as a result of this there is decrease in the issue of new visa.
Impact of the shutdown on India's economy:
There was a sharp recovery on Indian rupee in the month of September but with the shutdown, the price has decreased considerably. One of the renowned economists Mr. Arvind Virmani said, "While this uncertainty lasts in the US, there will be hesitation in giving new orders in investment and exports. This will weaken our exchange rate." India is not dependent on the USA for any kind of product thus I do not think this us federal government shutdown will impact anything.
India is home to many multinational companies, the impact of this shutdown has hampered the financial segment of these companies which ultimately affected the IT sector of Indian subcontinent.
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