India, he said, is “well equipped to handle any impact on the exchange, manage any excessive volatility in exchange… In terms of our reserves, the health of the banking system, the health of the economy, we are well placed there”.
He further stated that if the US increases issuances of debt, it could raise interest rates, and that could affect India as well, but that volatility too can be managed with inflow coming due to the inclusion of Indian bonds in the JP Morgan Index.
India will be included in the FTSE Russell indices. He said that the impact of the market will depend on measures the US takes on global tariffs and the way it manages its fiscal balances.
Sovereignty InvolvedSeparately, Rabi Sankar categorically said that India will not give in to the European Securities and Markets Authority‘s (ESMA) demand for oversight rights since it infringes on India’s sovereignty.ESMA insists on auditing the books of the Clearing Corporation of India (CCIL) – the platform on which government securities are traded – to permit European banks to trade on it. India has refused permission.
“The issue is not refusing anything to anyone. We have taken a stand that ESMA is being extra-jurisdictional in telling us how we should regulate,” Sankar said. “They are constrained by the law, which is extra-jurisdictional. We were willing to accommodate that if they trusted us. There is no way we can agree to that without compromising the sovereignty of policymaking,” he added.
Elaborating on ESMA’s demands, Sankar said: “There are two kids in a neighbourhood. The parent of one child tells you that his kid will come to your house to play with your child only if you have some particular gadgets in place to ensure the safety of my child. Not just this, he says he will also check your house for safety measures periodically to meet those standards. What would anyone do in this scenario?”