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Economists, exporters differ on possible impact of Scotland voting Yes

Exporters and economists differred on what would have been the impact on our merchandise trade if the Scottish referendum result had gone the other way.

The impact, if any, would have come from exchange rate volatility and fund flows, felt CARE Ratings’ chief economist Madan Sabnavis.

The new currency of Scotland would have been benchmarked to the pound but the latter would have fallen against the dollar and euro, he said. Still, as most of India’s trade is in dollars and euros, the impact wouldn’t have been much.

Britain constitutes almost three per cent of India’s total exports and 1.5 per cent of our imports.

“It is status quo now,” said YES Bank chief economist Shubada Rao when asked about the impact of Scotland’s decision. Sabnavis agreed.

Ajay Sahai, director-general of the Federation of Indian Export Organisations, said there would have been an impact if Scotland had decided to quit from the UK.

“The impact would have come not only from exchange rate movements but through a whole lot of uncertainty the decision would have unleashed, not only on the UK but also the entire Europe,” he said.

The demand for goods would have come down, as it would have created uncertainty in the minds of people about such a decision on the economies and employment, he said. “It’s a good decision. Now, it will not have any effect on the trade,” Sahai said.

The rupee trimmed its initial gains, ruling higher for a fourth day, moving up another two paise to 60.82 against the dollar, on persistent selling of the greenback by banks and exporters in view of a weaker dollar abroad.


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