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India will see limited impact of Greece debt crisis: RBI guv Rajan

business Updated: Jul 02, 2015 16:04 IST
Greece debt crisis


India will see limited impact of the Greece debt crisis as the country has little direct exposure to the European nation, Reserve Bank of India governor Raghuram Rajan said on Thursday.

"Greece is an evolving situation. The direct exposure to Greece is very very limited for India, both financial and trade," Rajan said after the Reserve Bank's board meeting in Chennai.

"...the direct impact is limited. Our sense is, after the initial burst of volatility, which might be (if) developments turned adverse then investors will start differentiating," he said.

Investors will see that India story actually continues to be a good one, he said.

On the indirect fall out of the Greek crisis, Rajan said there could be some impact on exchange rate depending on how euro will react to any untoward developments in Greece leading to a risk of sentiment amongst global investors.

India not only have good macro policies in place, but growth prospects are quite healthy relative to rest of the world.

"Plus, the buffers we have are quite reasonable, including our foreign exchange buffers...and I am fairly confident the next phase after initial volatility will be a reassessment which will be in our favour," he said.

Greece's radical Left government has suggested it would resign if it fails to get its way in a make-or-break referendum Sunday that could decide the country's financial future.

Moody's has slashed Greece's credit rating to a deep-junk "Caa3", warning it is now less likely that official creditors will support the country, whatever happens in the referendum.

The one-notch cut took Greece's rating to just two steps above "default", and came after both the expiration of the country's European Union bailout programme without a replacement on Tuesday, and Athens's default on its debt to the International Monetary Fund.

Read: Debt crisis: Moody's downgrades Greece to Caa3

Greece crisis: India braces itself for negative fallout

Greece sinks deeper into crisis, will not repay IMF debt