Greece crisis may have indirect impact on India: finance secretary

Says govt in touch with RBI to deal with any situation

The financial crisis in Greece may have an indirect impact on India as it impacts the euro, Finance Secretary Rajiv Mehrishi said on Monday.

The government is monitoring the developments with regards to Greece and its creditors but does not have a firm plan in place to deal with any significant fallout, he added.

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Worries over Greece sparked a sell-off in emerging markets on Monday. Nifty fell as much as 2.2%, while the benchmark 10-year bond yield hit its highest since May 22.
 

"This a dynamic and evolving situation. There is no firm plan that we can access," Mehrishi told reporters. "Nobody can predict what the exact situation would be."

"We do expect interest rates to firm up in Europe going forward. The markets are trying to build in the risk in the system," he said. 

Mehrishi added the government was in touch with the Reserve Bank of India (RBI) to deal with any situation.
 

RBI Governor Raghuram Rajan said last week he expected India's economy would be able to withstand any impact from the crisis in Greece thanks in part to its foreign exchange reserves, which reached a record high of $355.46 billion as of June 19.

Mehrishi said on Monday the fallout from Greece would not have a direct impact on India but that flows would be a potential concern.

"If yields on euro bonds go up, then it might impact inflows and outflows from India," he said.

Chief economic advisor Arvind Subramanian said that India behaving in line with other emerging markets and there is no need to worry.