Greece crisis and its Impact on India

Greece’s default on its payments and resultant weakening of the euro will have indirect effect on the India’s economy.

Created On: Jul 1, 2015 11:04 ISTModified On: Jul 1, 2015 13:08 IST

Default by Greece on loans repayment to the IMF, would be first case by an advanced economy which will have impact on both the world economy and Indian economy.

Though India’s economy is not Greece-centric, Greece’s default on its payments and expected weakening of the euro will have indirect effect on the country’s economy.

Europe is India's largest trading partner with 129 billion US dollars of merchandise trade registered in 2014-15. Of this the European Union accounted for 97 billion US dollars with the UK, Germany, France and Italy being the leading partners.

India will earn less on its exports especially engineering goods for which is the Europe is the largest destination.

Further, Europe is the second biggest outsourcing market for the Indian IT firms after the US and any crisis in Europe will also have implications for the Indian exports economy.

The biggest fear on account of Greece crisis would be on capital inflows as it may trigger capital outflows from the India with interest rates set to rise in order to face the volatile situation in the capital market.

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