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Govt monitoring Greek situation, says may have indirect impact

Chief Economic Advisor Arvind Subramanian has said the country is relatively well insulated from the Greece situation, however, rupee might get affected to some extent due to flight of foreign investment.

"No" supporters shout slogans during celebrations following a referendum in front of the parliament in Athens, Greece July 5, 2015. (Photo: Reuters) "No" supporters shout slogans during celebrations following a referendum in front of the parliament in Athens, Greece July 5, 2015. (Photo: Reuters)

With Greek voters rejecting the European bailout proposals heightened the risk of Greece's exit for the Eurozone, the government on Monday said it is closely monitoring the situation as India may be indirectly impacted from the fallout.

"We will have to see how the Euro moves now. We are closely monitoring the Greek situation. There could be some reaction on the Fed rate hike", Finance Secretary Rajiv Mehrishi said in the national capital. "Greece crisis might impact India indirectly", Mehrishi added without elaborating.

Meanwhile, Chief Economic Advisor Arvind Subramanian has said the country is relatively well insulated from the Greece situation, however, rupee might get affected to some extent due to flight of foreign investment.

"Financial markets are likely to be volatile...India has sufficient forex reserves", Subramanian said. As many as 61 per cent of Greeks voted for a no on Sunday, heeding calls from Prime Minister Alexis Tsipras to reject a proposal by the country's creditors for more austerity to keep finical aid going.

The benchmark Bombay Stock Exchange (BSE) Sensex in early trade on Monday fell below the 28,000 mark by plunging more than 250 points as Greeks rejecting creditors conditions put the nation one step closer to exiting from the Eurozone.

Last week, industry and government officials have warned that India's software and engineering exports may take a hit and the country may also face larger capital outflows due to a weaker euro with Greece facing a full-blown economic crisis.

Commerce Secretary Rajeev Kher had said that exports from India would be impacted negatively if the European Union is hit from the Greece crisis, although he ruled out any major direct impact of the prevailing Greek situation.