Greece crisis or Raghuram Rajan's forecast! Here’s why it will not adversely impact India

The Greece financial crisis and the Reserve Bank of India (RBI) governor Raghuram Rajan’s statement indicating the world economy may be in a tizzy has already sent jitters across the globe. But while most worry about the future in fear, analysts expect the Indian economy to be resilient to any adverse changes.

“India is in a unique position to be insulated from financial shocks to a large extent due to the fiscal policies of our government. Raghuram Rajan may be right about the developed world facing a financial market crisis. There is Greece’s debt crisis and fluctuating crude oil prices as well as the recent problems with the China’s economy,” said Rohit Gadia, CEO of Capitalvia.

He added, “There is nothing to worry much this time as India is well positioned compared to the previous period of crisis, It has foreign exchange reserves of $355 billion, relatively stable currency and improved fundamentals. Thus at this point of time Greece isn’t a major worry but it can lead to volatility and slowdown In Indian exports. Bottom line for stability in Indian markets is focus on key reforms land Bill & GST and others.”

Taking note of the Greece crisis, Rajan had noted that the policies followed by most major central banks across the globe were at the verge of slipping into ‘beggar-thy-neighbour’ situation, a strategy adopted in 1930s.

“The RBI governor has showed this concerned towards worlds economy after looking at the unconventional monetary policies followed by the US Federal Reserve and ECB,” explained Gadia.

Commenting on the impact of the statements and the current economic situation of the world on rupee, Sudip Bandhyopadhyay, managing director and CEO of Destimony Securities, brushed aside any fear of rupee value dwindling down.

“Rupee has been stable despite the turmoil that has been there across the globe. I believe the relative strength of rupee will continue unless RBI wants it to decline,” Bandhyopadhyay noted.

Explaining his point, he said that RBI has to take into consideration the growth of the export sector and hence there could be gradual decline in the rupee value over the next few months. “If you ask me where the rupee is heading to, then I think the currency will trade around 64 all year round against a dollar,” noted Bandhyopadhyay.

Analysts also expected the Indian markets to be resilient to any global crisis. Gadia of CapitalVia stated that the Indian stock market is well positioned. “We think that they are much well positioned after the quick and prompt response from the central bank as well as from the government for any kind of global crisis. In India we also have seen that the RBI governor is controlling the key interest rates after taking all the factors in to consideration for a better and fruitful impact. While it can trigger short term volatility in the Indian markets but we do not expect any major impact in long term.”