Economists warn of effects on Greek debt crisis on Indian economy July 6, 2010Posted by Yilan in India, Yunanistan.
Tags: Greece, India
Prominent economists in the country have said that the implications of the debt crisis in the Greek economy on the Indian economy will be mainly on the financial markets and is unlikely to affect the economic growth.
The Kaushik Basu, Chief Economic Adviser of the Ministry of Finance said that the impact of the debt crisis in the country will result in capital flows looking for safe heavens and slight drop in exports.
He continued that only 0.05% of India’s exports are to Greece and the banking sector have very limited exposure to the troubled country. The measure taken by the European Union and the IMF may control the crisis in the country. He added that another grim scenario could be that the whole Europe in sucked in to another crisis.
Another economist, Pranob Sen indicated that the situation in Europe could lead to softening of the interest rates. He expects the economic growth in the country to remain stable.
The chief economist at Crisil, DK Joshi said that the implications on the Indian economy will depend on how the situation is dealt with. The package has stopped the crisis from spreading so far. He added that it is highly unlikely that the crisis will spread to countries outside Europe.
Meanwhile, the German government has approved the proposed $1 trillion safety net for controlling the uncertainty for the Euro after there were some concerns that the crisis could affect the economic recovery.
The finance ministers from EU countries met in Brussels to put in place tougher sanctions for states that break the budget rules.