Economists' take on impact of Greek crisis on Indian economy

The Greek crisis has singed the financial markets across the globe. ET spoke to India's leading economists to ascertain the impact of the crisis on the Indian economy. Well, none of them seem to think it will make a difference to India's economic growth, expected at 8.5% in the current fiscal, but financial market could feel the tremours.

Kaushik Basu, Chief Economic Adviser, Ministry of Finance


The Greek sovereign debt crisis on its own would have little impact on us.-- There will be some additional capital flows coming in in search of a safe haven and a small drop in exports. Only 0.05% of India's exports go to Greece and Indian banks have virtually no direct exposure to Greece.

But after Europe and the IMF put in the massive rescue package, including close to a trillion dollars of standby fund, the stakes have been raised.

It is likely that the Greek crisis will be contained, in which case even the above small effects on India will not be there. But there is a small possibility now that all Europe will be sucked into the crisis, in which case there will be another global economic downturn, where India's only consolation will be that we will have all nations in the world for company

Pranob Sen, Chief Statistician

Heightened uncertainty in Europe could actually lead to softening of interest rates. Bond defaults in Europe will also contribute to the same. About the GDP- it should remain consistent.

DK Joshi Chief Economist, Crisil

Impact depends on how the crisis pans out. The bailout package has prevented the crisis from accelerating. What would be affected- capital inflows and export market. Our fiscal deficit is met by domestic borrowings so that reduces our vulnerability. The impact on GDP can't be ascertained right now as it depends on much the crisis intensifies in the future. The probability of the impact spreading to countries outside Europe is low.