Govt, regulators working on contingency plan on euro crisis

"Contingency measures are there... Measures are being worked out. For that, a separate committee is working," he said after a meeting of the sub-committee of Financial Stability Development Council (FSDC), chaired by RBI Governor D Subbarao, here.

FSDC is the high-level body for co-ordination among regulators and is headed by Finance Minister Pranab Mukherjee, while its sub-committee is chaired by the RBI Governor.

"We have discussed all global developments, the eurozone was discussed. If it (the deepening of eurozone crisis) happens, you have to face it," Chakraborty said.

He said the sub-committee also reviewed the recent global developments, specifically in the eurozone and the US, and their consequences on the Indian economy.

The meeting also discussed the concerns on slowing growth, persistent inflationary pressures, growing fiscal and current account deficits and negative market perceptions.

The eurozone crisis, in particular, has hit the Indian economy in terms of rupee losing over 20 per cent against US dollar since January and capital outflows from the stock market.

Indian economy is battling rising inflation and declining growth, which experts feel could lead to a 'stagflation' -- a situation marked by persistent high inflation and low growth.

Economic growth slowed to a nine-year low of 6.5 per cent in 2011-12, while industrial output grew by a mere 0.1 per cent in April. MORE