<p>World markets tumbled on Monday as Greece decided to shut its banks a day before Athens appeared to be heading towards a default on the €1.6 billion loan taken from the International Monetary Fund.<br /><br />Britain’s FTSE fell about two per cent, while German DAX and France’s CAC fell by about 5 per cent. Ripples were felt in India, too, as the Sensex fell over 600 points during the opening trade but recovered later in the day to end at 27,645.15 points, down 166.69 points from the previous day. <br /><br />If Greece defaults, it could be forced to leave the European Union (EU). That in turn could lead to panic selling by investors prompting them to pull out from riskier assets in emerging economies and other more fragile ones. The turmoil in financial markets across the globe came after Greece early on Monday imposed capital controls and closed banks till at least July 6. A €60 ($ 65) limit on cashpoint withdrawals has been imposed. <br /><br />Foreign tourists, a vital engine of the Greek economy, have been exempted. Prime Minister Alexis Tsipras decided to call a surprise July 5 referendum on a proposed bailout package.<br /><br />Calling for a compromise, German Chancellor Angela Merkel warned that “if euro fails, Europe fails”. However, the drastic measures, designed to protect the banking system against the threat of mass panic sent Greeks rushing to withdraw their daily allowance. Jittery housewives, shoppers and business owners formed long lines at ATMs across Greece on a day dubbed “Black Monday”. <br /><br />Govt in touch with RBI<br /><br />Experts in India feel the developments are an initial knee-jerk reaction as Greece is a tiny economy in the EU with a total contribution of only two per cent of Europe’s GDP.<br /><br />Finance Secretary Rajiv Mehrishi said the situation in Greece was evolving and so was the government’s plans. “The government is preparing itself for the evolving crisis. We are in touch with the RBI,” said Mehrishi.He said there was a risk of capital outflow from India in case interest rates firmed up in Europe. Chief Economic Adviser Arvind Subramanian said there was no cause for worry. <br /><br />He said India was responding to the crisis in line with other global economies.Commerce Secretary Rajiv Kher said India’s exports will not be hit due to the crisis. However, if the EU gets impacted by the crisis, India’s exports will suffer, he added. <br /><br />Europe is India’s largest trading partner accounting for $129 billion of merchandise commerce in 2014-15. Of this, the EU accounted for $ 99 billion with UK, Germany, France and Italy being the major partners.</p>
<p>World markets tumbled on Monday as Greece decided to shut its banks a day before Athens appeared to be heading towards a default on the €1.6 billion loan taken from the International Monetary Fund.<br /><br />Britain’s FTSE fell about two per cent, while German DAX and France’s CAC fell by about 5 per cent. Ripples were felt in India, too, as the Sensex fell over 600 points during the opening trade but recovered later in the day to end at 27,645.15 points, down 166.69 points from the previous day. <br /><br />If Greece defaults, it could be forced to leave the European Union (EU). That in turn could lead to panic selling by investors prompting them to pull out from riskier assets in emerging economies and other more fragile ones. The turmoil in financial markets across the globe came after Greece early on Monday imposed capital controls and closed banks till at least July 6. A €60 ($ 65) limit on cashpoint withdrawals has been imposed. <br /><br />Foreign tourists, a vital engine of the Greek economy, have been exempted. Prime Minister Alexis Tsipras decided to call a surprise July 5 referendum on a proposed bailout package.<br /><br />Calling for a compromise, German Chancellor Angela Merkel warned that “if euro fails, Europe fails”. However, the drastic measures, designed to protect the banking system against the threat of mass panic sent Greeks rushing to withdraw their daily allowance. Jittery housewives, shoppers and business owners formed long lines at ATMs across Greece on a day dubbed “Black Monday”. <br /><br />Govt in touch with RBI<br /><br />Experts in India feel the developments are an initial knee-jerk reaction as Greece is a tiny economy in the EU with a total contribution of only two per cent of Europe’s GDP.<br /><br />Finance Secretary Rajiv Mehrishi said the situation in Greece was evolving and so was the government’s plans. “The government is preparing itself for the evolving crisis. We are in touch with the RBI,” said Mehrishi.He said there was a risk of capital outflow from India in case interest rates firmed up in Europe. Chief Economic Adviser Arvind Subramanian said there was no cause for worry. <br /><br />He said India was responding to the crisis in line with other global economies.Commerce Secretary Rajiv Kher said India’s exports will not be hit due to the crisis. However, if the EU gets impacted by the crisis, India’s exports will suffer, he added. <br /><br />Europe is India’s largest trading partner accounting for $129 billion of merchandise commerce in 2014-15. Of this, the EU accounted for $ 99 billion with UK, Germany, France and Italy being the major partners.</p>