Greece Debt Crisis: Indirect impact over Indian Economy

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The Greece Debt Crisis is becoming a disaster over the Eurozone which comprises of the European countries.  The countries economy has flattered which lead to the reduced purchasing power of their citizen, ceased its  export and curtailed the tourism. As a result of this , the Greek banks are running in a very critical situation. Several banks have been shut up and the government has implemented capital control as the European Central Bank(ECB) declined to give Greece more emergency funding. Also they had been locked in negotiations with its creditors.

To strengthen the economy, Greece developed a rescue package through drawing money from their international creditors.  To decide upon this the government framed a referendum and opened to the citizens to mark their  opinion through voting . A “no”  vote to the referendum indicates the opinion of  citizens to continue with the present European union and “yes” would mean more austerity and social destruction which indicates that the government should not  last long. But 61% of the citizens rejected the bailout terms which strengthened the Greek government to strike on a deal for fresh funding of money for the survival of the government and to determine a new fate for the country.

Experts feel that the The Greece Debt Crisis is unlikely to impact India as the Indian financial system is strong and well maintained. Our country’s commercial bilateral engagement is limited and we have our own  strong fundamentals and policies. The chief economic advisor of government Mr. Arvind Subramanian proposed that India is insulated from this crisis in three ways which includes the stable macro economic situation, good amount of reserves and an economy with very attractive investment destination and  the only way it will affect the  Indian economy will be on the value of the rupee which may decline. Also he suggested that the financial markets will be volatile when the ECB takes this into account. The Finance Secretary Rajiv Mehrishi said  that this crisis might affect India indirectly and the government has to closely monitor the  situation and be prepared.

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