No firm plan to tackle Greek tragedy, says Finance Secy Rajiv Mehrishi

Amid fears that the financial collapse in Greece may snowball into a pan-Europe crisis, finance secretary Rajiv Mehrishi said on Monday that the government is in touch with the Reserve Bank of India (RBI), which would take necessary steps to deal with the issue but added that India does not have a firm plan in place to deal with any significant fallout.

Greece imposed capital controls and closed banks till, at least, July 6 after Prime Minister Alexis Tsipras decided to call a July 5 referendum on a proposed bailout package.

German Chancellor Angela Merkel said that any new negotiations with Greece on its crippling debt crisis should come after its upcoming referendum on the bailout proposals.

According to news agency Reuters, Mehrishi told reporters in the national capital, "This  is a dynamic and evolving situation. There is no firm plan that we can access. Nobody can predict what the exact situation would be. Obviously, we are in touch with the RBI but they will do what they have to do."

He added that the situation in Greece has no direct impact on India but there may be some indirect effect via Europe on capital inflow and outflow from the country.

"Interest rates may firm up in Europe leading to an outflow of foreign capital from India. Mehrishi termed the situation as dynamic and evolving adding that the crisis may have an indirect impact on India by way of its outcome on the euro.

"To the extent it affects the euro, there might be some indirect impact on India. If yields on euro bonds go up, then it might impact inflow and outflow from India", he said.

Mehrishi said that nobody can predict how the situation will evolve. Engineering Export Promotion Council of India said that exports will be affected as the European Union (EU) is the largest destination for such shipments.

For April-May, engineering exports to the EU stood at $1.86 billion as against $1.89 billion in the year ago period.

Shares of Indian companies with exposure to Europe faced selling pressure. Shares of Bharat Forge plunged 4.03 per cent, Tata Motors 2.07 per cent, Havells India 1.66 per cent, Motherson Sumi Systems 1.32 per cent and Tata Steel 0.79 per cent. IT stocks also faced selling with HCL Tech falling 2.78 per cent, Infosys 1.58 per cent, Wipro 1.23 per cent.