The "lengthening shadow" of the debt crisis in Europe is a cause for concern, finance minister Pranab Mukherjee said on Tuesday.
Growing fears of a potential Greek debt default ripping into Europe's banking sector have rattled world markets and add to the domestic concerns of Indian policymakers struggling with high inflation and a cooling economy.
India will report August inflation on Wednesday and the number is expected to influence the central bank's decision on whether or not to raise rates on Friday.
The Reserve Bank of India has raised rates 11 times in the past 15 months to tame stubbornly high headline inflation, which stood at 9.22% in July.
The danger that a Greek debt default could roil bigger European economies was underlined on Monday as heavily exposed French banks' shares plunged and investor confidence in the euro zone's ability to surmount a sovereign debt crisis ebbed.