With Greece witnessing a full-blown economic crisis, India’s software and engineering exports may take a hit and the country may also face larger capital outflows due to a weaker euro, industry and government officials warned today.
Worried that the Greek crisis may trigger capital outflows, Finance Secretary Rajiv Mehrishi today said the government is in touch with the Reserve Bank which will take necessary steps to deal with the issue.
“Obviously we are in touch with the RBI but they will do what they have to do,” he told reporters here as uncertainty over Greece pulled down the BSE index, Sensex, by over 500 points in early trade though it recovered in the afternoon today, June 29.
The situation in Greece has no direct impact on India, he said but added that there may be some indirect effect via Europe on capital inflows and outflows here.
The Greece situation battered the stock markets globally today, June 29, including in India, as foreign investors looked to re-allocate their portfolios in the wake of weakness in euro against various other currencies, while the companies with direct exposure to Eurozone markets were hit hardest.
This is contrast to RBI governor’s Raghuram Rajan comments last week that India may be able to withstand the impact. Commerce Secretary Rajeev Kher said exports from India would be impacted negatively if the European Union is hit from the Greece crisis, although he ruled out any major direct impact of the prevailing Greek situation.