Govt says India insulated from Greece fallout; rupee may get hit

New Delhi (PTI): With Greeks’ rejection of rescue package from creditors spooking markets, the government today asserted that India is well insulated from the crisis but rupee may be affected due to the outward flight of investment.

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“This is a drama which is going to play out for sometime. We are well protected in at least three ways. Our macro- economic situation is much more stable. We have (forex) reserves. We are an economy which is still a very attractive investment destination. So I think we are relatively well insulated,” Chief Economic Advisor Arvind Subramanian told reporters here today.

Greeks had yesterday rejected a rescue package from its international creditors, throwing the future of the country’s Eurozone membership in doubt.

“As for the crisis itself, it is going to going to be long and prolonged. Tomorrow is a big meeting of the German and the French head of the states. Let’s see, it is up to Europe to respond,” he said.

On the likely impact of the crisis on Indian economy, he said, “In these situations what mostly happens is there is flight to dollars, to a safe haven. Rupee might also be affected by that. But nothing gets unusual at all so far.”

He said as the crisis plays out “financial markets are going to be volatile. Both the ECB and Fed will take this into account.”

Finance Secretary Rajiv Mehrishi said government is closely monitoring the situation as India may be indirectly impacted.

“We will have to see how the euro moves now. We are closely monitoring the Greece situation. There could be some reaction on the Fed rate hike likely,” he said here.

“Greece crisis might impact India indirectly,” he added without elaborating.

4 Comments

  1. Dear readers,

    During the election days and early days of Narendra Modi-led NDA government it was hailed that Indian Rupee (INR) was doing very well versus the USD. And it was hailed that it is due to BJP and Modi coming in power. Six months down the line INR is almost back to 61.8 for a USD. This was 62.50 in January-2014 and after the Modi government swearing-in, it came down to 58.33 on May 22.

    Now the fall to 58.33 may be seen as a political move, just to prove that Modi government is magically going to change things. The BJP supporters on various platforms were hailing this great magic.

    But now we are back to touching INR 62 for a USD. The magic has disappeared – and we are importing equally and the trade deficit is really high and growing. The situation over six months has gone worse and there is no explanation from BJP government.

    This is one among various failures of BJP government is six months. And also casts serious aspersions over the momentary and magical fall of INR vs USD around May-2014. When the elections were being conducted and just after elections – it hit the best numbers. And from there INR has constantly lost against the USD. In this department the BJP government has failed to control the currency, imports and in turn trade deficits.

    Now even the ‘Laxmi’ is not favouring the PM Modi’s ‘good governance’. All that blunt attack against the most educated former PM Manmohan Singh who steered the Indian economy twice justified ‘Maun’ is better than ‘Man ki bath’.

    Now Modi great financial advisor Jaitley,Junior Sinha,Arun Shourie has nothing but to compare it to ‘drama’, while real characters are playing them behind curtain.’Sab ka sath sab ko lota’ is only answer at the give rate of farmers suicide,essential commodity and petroliem product rise.

    While our globetrotting PM Modi promoting mild disorder like “selfie”.

    Jai hind

  2. The BJP Government has no idea about the world economy. Mr. Arun Jaitley makes comments changing from hour to hour, he is in total confusion. They are giving false promise to the electorate. The Greece crisis will mainly hit the Eurozone countries, mainly in their stocks, and its aftermath will hurt the whole world in certain degree. Already the Wall St felt the pain.

  3. Dear readers,

    Effect of PM Modi’s China visit: Chinese inspectors may allow Indian beef exports

    http://articles.economictimes.indiatimes.com/2015-06-26/news/63862148_1_non-basmati-buffalo-meat-china-visit

    Beef may be having rough days under the BJP government, but Prime Minister Narendra Modi’s visit to China last monthmay have cleared the way for export of the meat to the world’s biggest market two years after an agreement was signed. Agri-products such as pomegranate, non-basmati rice and okra could also find their way to China as India steps up efforts to reduce the imbalance in bilateral trade.

    China’s demand for Indian buffalo meat is estimated at about $1.5 billion a year.India became the world’s top beef exporter last year. Bovine meat overtook basmati rice as the country’s single largest agri export item in 2014-15, posting a 10% growth to $4.79 billion.

    While BJP ruled Maharashtra may banned beef consumption for domestic use citing agrarian reason, economically hitting minority Muslims with upto 5 lakh unemployment directly related to the industry. Under PM Modi’s new ‘pink revolution’ of ‘Go-matha’ is relentlessly slaughtered for exports to foreign consumers aiming for high forex.Beef exports have increased by there is a 19 per cent increase compared to the previous fiscal year since Modi came into power.As religious groups mourn the sacrilege of cow slaughter—urban, well-traveled Indians are developing a taste for beef.

    A Burger Boom in the Land of the Sacred Cow

    http://nextcity.org/daily/entry/a-burger-boom-in-india-land-of-the-sacred-cow

    Some 30,000 Indian soldiers guarding the border with Bangladesh have a new mandate under Prime Minister Narendra Modi’s government this year – stop cattle from crossing illegally into the Muslim-majority neighbour.

    The crackdown is one of the clearest signs yet of how Indian policies, increasingly influenced by Hindu nationalist ideology, are having an economic impact on neighbouring countries as well as the sizeable Muslim minority at home.

    About 2 million head of cattle are smuggled into Bangladesh annually from India. The $600 million-a-year trade has flourished over the past four decades and is considered legal by Dhaka.

    Modi’s government, which came to power with the help of the Hindu nationalist Rashtriya Swayamsevak Sangh (RSS), wants to put an end to it.

    India’s push to save its cows starves Bangladesh of beef

    http://in.reuters.com/article/2015/07/03/india-cattle-bangladesh-idINKCN0PC2OM20150703

    Bangladeshi traders who operate auctions to facilitate the sale of cattle to slaughter houses, beef processing units, tanneries and bone crushing factories estimate the industry contributed 3 percent to the country’s $190 billion economy.

    . “Buffalo meat isn’t beef,” says Vinod Bansal, spokesperson for Vishva Hindu Parishad, a Hindu nationalist organization. “Only cow meat is beef and India doesn’t export that. And if a Hindu eats beef he or she cannot be called a Hindu.”

    Selling the Sacred Cow: India’s Contentious Beef Industry
    http://www.theatlantic.com/business/archive/2015/02/selling-the-sacred-cow-indias-contentious-beef-industry/385359/

    ‘Starving Bangladesh of beef’ would cost India Rs 31,000 crore

    http://timesofindia.indiatimes.com/india/Starving-Bangladesh-of-beef-would-cost-India-Rs-31000-crore/articleshow/46790339.cms

    “This country wants a Green Revolution but Modi at the Centre want a Pink Revolution,” . Nearly $5 Billion worth industry is only sacred to its RSS and minority need to starve at any cost.

    Jai hind

  4. Dear readers,

    The IMF thinks Modi’s 8.5% growth forecast is nonsense
    http://qz.com/361126/the-imf-thinks-modis-8-5-growth-forecast-is-nonsense/

    In a report on March 11, the IMF said that based on the revised GDP calculations, it estimates that the economy will grow by 7.5% in 2016. The revision has been driven by stronger investment following improvement to the business climate.

    But the Indian rupee is still under pressure. The currency has been volatile in recent months, mainly because of external factors. The US Federal Reserve’s impending interest rate hike has boosted the dollar, as the American economy shows signs of improvement.

    Wholesale price inflation—which represents the price of goods traded in bulk—has substantially eased from April 2014, but now is in the negative territory. In March 2015, it fell to the lowest level in nine years. This was primarily because prices of manufactured products dropped, which isn’t exactly a good sign for industry.

    with new poverty line: Rs 32 in villages, Rs 47 in cities PM Modi can only give free ‘Yoga’ classes and ‘Go-Muttra’ for starving poor. While ‘Roti,Kapda,makan’ is the slogan of Congress in the past, BJP wants ‘corporate,communal,corruption’.

    While Modi is globetrotting asking selfie disorder to spread among fathers.

    Jai hind

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