India seen safer bet after Greece crisis, says Chawla

NEW DELHI: The financial markets may be in a tizzy, but the India government does not see the debt crisis in Greece having an immediate adverse impact. On the contrary, a key official of the finance ministry feels the crisis may actually bolster the country’s image as a “relatively safer haven” for investments in the short run.

“As far as India is concerned, the impact on us will be minimal. In fact, in the short run — that is, purely in the short run — it might help us in terms of India being regarded as a relatively safer haven,” finance secretary Ashok Chawla said on Monday at the sidelines of an industry association function

The government is, however, keeping a close watch on developments in Europe, especially since it accounts for more than a fourth of India’s exports.

“We are keeping a very close watch (on Europe). So far there has not been any adverse impact, but the situation is being carefully monitored,” commerce and industry minister Anand Sharma told reporters on the sidelines of a Tea Research Association function on Monday.

The minister added that he did not foresee in the immediate context any major impact, which could create an alarm or concern in India.

The European Union and the International Monetary Fund (IMF) have agreed on a e750-billion bailout package for Greece.

Mr Chawla said that though the Greece crisis could cause some hic-cups in the Eurozone, it would not have a major impact on the international financial community.

“We were immune when there was a much larger international financial crisis. The Greece crisis is much smaller in scale and magnitude to what the world has seen in the last one-and-a-half years,” he said. On the issue of hiking the FII limit in the domestic debt market, Mr Chawla said, “We are looking at that. But that is not just dependent on this issue, it is dependent on a number of factors.”

He said that government is aware of the inflation issue and has taken a number of administrative and policy steps to rein in the problem.

Mr Chawla also said that that the money expected to come through the 3G auction looks “very very impressive”. This would not have any impact on the government’s borrowing plans at this point of time, he added.

On day 23 of the 3G auction, the government’s potential revenue from the auction crossed the Rs 54,000-crore mark against the budgeted Rs 35,000 crore from both 3G and Wi-Max auction.