In order to kick start the engine of growth by cajoling the investors and consumers alike and keeping the long term interest rate subdued U.S Federal Reserve had announced the securities and treasury buying programme during the recession period 2008-09. Till now, through the successive enhancement of its bond buying programme known as QE1,QE2, QE3 Fed had committed to inject $85 billion of money every month. In its latest move it has decided to taper it by $10 billion to $ 75 billion. This gradually easing of the bond buying programme is known as Quantitative easing or popularly as Fed tapering.
It is quite evident that the Fed quantitative easing is solely based on the U.S economy which has been gradually showing the sign of recovering from recession. But as the capital barriers progressively being lowered in the fast globalizing world, the flood of money released through bond buying programme sought and found opportunities providing higher rate of return, where ever possible.
Countries who need the capital to fund its own growth, welcomed this capital. India too, became its one of the beneficiaries and has received around $31 billion of money only after QE3 easing in the stock market. Pertinently, It helped India to mange its current account deficit as well as it played a significant role for balancing the Balance of Payment.
Consequently, In the month of May-June decision of easing out the bond buying programme by the federal reserve created the havoc in the global markets. India too felt its burnt as it witnessed a heavy fall in rupee amid fears of pull out of FII's money as well as widening current account deficit. Moreover, policy paralysis and long queue of mummified ,stagnating projects further blurred its path of recovery.
At the same time, this programme has a brighter side also, as it indirectly showing the recovery of U.S economy thus opening up the gate of opportunities. So its high time that India should start to set its house in order, as stronger U.S means more opportunities of technology transfer, growth in exports , therefore, attract larger and more stable foreign flows. In the end, I can say irrespective of the short term consequences of Fed taper a stronger U.S economy is the blessing for the global economy.
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It is quite evident that the Fed quantitative easing is solely based on the U.S economy which has been gradually showing the sign of recovering from recession. But as the capital barriers progressively being lowered in the fast globalizing world, the flood of money released through bond buying programme sought and found opportunities providing higher rate of return, where ever possible.
Countries who need the capital to fund its own growth, welcomed this capital. India too, became its one of the beneficiaries and has received around $31 billion of money only after QE3 easing in the stock market. Pertinently, It helped India to mange its current account deficit as well as it played a significant role for balancing the Balance of Payment.
Consequently, In the month of May-June decision of easing out the bond buying programme by the federal reserve created the havoc in the global markets. India too felt its burnt as it witnessed a heavy fall in rupee amid fears of pull out of FII's money as well as widening current account deficit. Moreover, policy paralysis and long queue of mummified ,stagnating projects further blurred its path of recovery.
At the same time, this programme has a brighter side also, as it indirectly showing the recovery of U.S economy thus opening up the gate of opportunities. So its high time that India should start to set its house in order, as stronger U.S means more opportunities of technology transfer, growth in exports , therefore, attract larger and more stable foreign flows. In the end, I can say irrespective of the short term consequences of Fed taper a stronger U.S economy is the blessing for the global economy.
For Interview Preparation-Tell me something about your self.
