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'Greek debt crisis not a major worry for Indian economy'
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SME Times News Bureau | 02 Jul, 2015
The deepening of the Greek debt crisis is unfortunate for the global
economy which may impact the economic and business sentiments across the
countries. However we believe that India is well prepared to handle the
shorter term volatilities, said Alok B. Shriram, President, PHD Chamber
of Commerce and Industry.
Many European economies including
Portugal, Ireland, Italy, Greece and Spain (PIIGS) are suffering from
fiscal sustainability concerns about large fiscal deficits and stagnated
growth scenario. The increasing unemployment rate and sluggish output
growth have escalated debt levels in these economies, said Shriram.
He
further elaborated that Greece’s debt-to-GDP ratio has already reached
an EU-high of 177% while unemployment is hovering at around 25% in
Greece. The massive amount of government spending designed to stimulate
the economies vis-à-vis to tackle unemployment is only leading to rising
debt.
India has emerged as global economic power-house as a
result of its relatively strong macro-economic indicators. The Indian
economy is expected to surpass China this year in growth meanwhile the
government and central bank has been able to intelligently manage the
macro-economic fundamentals in times of dynamic global scenario, said
Shriram.
Our macroeconomic fundamentals are very strong and almost all lead indicators are in positive trajectory, added Shriram.
The
real GDP growth in 2014-15 has been recorded at 7.3% and is expected to
enter into double digit trajectory in the medium term. The WPI
inflation is in negative trajectory while the CPI inflation has also
declined from 8.3% in May 2014 to 5% in May 2015. The Current Account
Deficit has declined to 1.3% of GDP in 2014-15 as against 1.7% of GDP in
2014-15. Further, the fiscal position of the government looks
impressive with the fiscal deficit for the 2014-15 registered at 4.0%
as against the target of 4.1%, while revenue deficit for 2014-15 at 2.8%
as against target of 2.9%, he said.
However in an event of
deepening of the Greek debt crisis, the domestic vulnerabilities arising
from trade and financial channels will need to be dealt proficiently
and swiftly said Shriram.
India may have some challenges to
growth including impact of fluctuating monsoons, rising levels of
non-performing assets and its consequent impact on highly leveraged
sectors including infrastructure, mining, iron & steel, textiles,
infrastructure and aviation, said Mr. Shriram.
Further, he
acknowledged that these structural weaknesses are in process of being
resolved and commended the practical measures being taken by regulatory
authorities to curb external spillovers in an effective manner in the
recent past.
Shriram stated that in view of the current global
economic developments, there will not be any sharp decline in rupee from
the current level. While there will not be any significant upward
movement from the current level, it will also not decelerate like August
2013. During the last one year, the rupee depreciated from around
59/USD in May 2014 (average) to about 64/USD (average) in May 2015.
Shriram
said that in times of dynamic movement of capital flows, India should
not be solely dependent on its large reserves of US$355bn. It is
necessary that reforms are implemented from the grass-root level to
strengthen the structural aspects of the economy. These measures will go
a long way in strengthening the economic and business sentiments, said
Shriram.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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