Finance minister Pranab Mukherjee said on Wednesday that Indian markets cannot remain immune to eurozone debt problems and will feel the impact if the $1-trillion bailout package by the EU and the IMF does not inspire confidence.
Mr Mukherjee attributed the problem of sovereign debt mess in eurozone to the initial hiccups in the integration problem of Europe. If the bailout package does not inspire confidence in the market, being far away, having no physical connectivity, Indian market gets disturbed. This is a problem of the global linkage which cannot be avoided, he said.
The central bank, however, said it is not changing its macro economic outlook on the basis of Greece debt crisis at this point. Indias benchmark index Sensex had declined 4.4 % or 789 points last week on concerns that Europe is facing prospects of a protracted debt crisis. However, the sensex bounced back on Monday after the announcement of the package.
The problem of European integration and particularly those who are yet to be fully integrated in all its aspects and more and more ... the new countries are providing in course of time some sort of uncertainty and with the global linkage, naturally it would have its impact, Mr Mukherjee said. However, once complete integration within Eurozone is through, financial situation will improve, he added. I am sure in due course, the government would adopt a system that not only strengthens the PDS but also reduces expenditure, he said.
A good monsoon, predicted by the Met Department in its first monsoon forecast would bring down the prices of essential items, he said.