(c)  Possible impact of global imbalances on India  As highlighted by our Finance Minister during the recent ADB annual meetings that apart from the impact on the real and external sectors, it is felt that the developments in the currency and capital market are intrinsically intertwined with the global imbalance and, therefore, in the eventuality of a disorderly correction, disruption in these markets in the form of large cross-currency volatility and sharp rise in interest rates are likely in the global economy.
What could be the possible impact of less than orderly adjustment of global imbalances on the Indian economy? India does not depend on the international capital market for financing the fiscal deficit and consequently to some extent adverse consequences of the global developments would be muted.