India remained vigilant even as the EU summit concluded last week with leaders agreeing to ink a draft for a new treaty to foster deeper integration among euro zone economies.
Finance minister Pranab Mukherjee said the EU crisis is a cause for concern for India and would hurt growth. Last week, India’s growth projections for the current fiscal year was revised downward to 7.5% from 9% projected in March, 2011.
The deal has failed to cheer analysts and investors worldwide, who said that even if the package works, it would take time before results start showing. "EU’s agreement to a sign treaty to foster deeper economic integration is definitely the route to take for the longer term but it is unclear how this would unfold in the short-term," Rajiv Kumar, secretary-general, FICCI, told HT. "If austerity measures become too stringent it could impact the global economy including India."
“A weak Europe is a reality for at least the middle of next year, though EU leaders have agreed on a treaty,: said DK Joshi, chief economist, Crisil. “That apart a lot would depend on the manner of execution of the agreement.”