India Braces for Greek Tragedy

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New Delhi: Greece’s bailout program ends on Tuesday, when the country is unlikely to make a 1.6 billion euro ($1.8 billion) repayment to the International Monetary Fund.

Greek PM Alexis Tsipras has called the referendum over the weekend and shut down banks for a week and imposed a daily ATM withdrawal limit of 60 euros.

Tsipras’s moves have spooked world markets, including India. Finance secretary Rajiv Mehrishi said the economic crisis in Greece may trigger capital outflows from India and the government is consulting the RBI to deal with the situation.

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With Greece witnessing a full-blown economic crisis, India’s software and engineering exports may take a hit, industry and government officials warned on Monday. Engineering exporters’ body EEPC India said the economic crisis in Greece will impact engineering exports from India as European Union is the largest destination for such shipments. The industry body said it sees indirect impact from the UK, Italy, Turkey and France.

Economists say there could be some temporary volatility in the financial market and if a Greece exit happens, then rupee might depreciate. ndia’s stock markets fell as much as 2.2% on Monday on Greece worries. The BSE Sensex and Nifty closed at their lowest in nearly two-and-a-half weeks. However, on Tuesday, Sensex has shed losses and is trading higher.

Indian authorities say they are drawing up plans to meet any adverse impact on the economy from the crisis. However, economists say authorities are better prepared this time to face any adverse fallout as the situation in Greece has been volatile for some time. Unlike the earlier global financial crisis, authorities have been preparing to deal with any adverse fallout of a Greece exit, but they say there may be short-term volatility.