Greece And Us - Times of India

The near-trillion dollar EU-IMF bailout for Greece and other weakened Eurozone nations was meant to "shock and awe". It achieved the intended effect, at least early this week. Indian shares gained the most in Asia piggybacking on a big global markets rally, with the Sensex on Monday swinging to a 10-month high after a week of bearish sentiments. With Portugal, Spain, Ireland and Italy threatening to catch Greece's flu, investors had been spooked everywhere. The global economy's recovery is still fragile. That this rebound won't be derailed courtesy resolute action the US, UK and Japan have also unlocked liquidity channels got a thumbs up from the bourses.

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While letting Greece sink was never an option, EU members have shown grit about sticking together. This was key to rebuilding market confidence in their ability to tackle any sovereign debt issues and shield the euro. But are Europe's troubles over? Not just yet. The bailout package may have political costs for individual governments. It's resented in many European societies, including big player Germany. As for Greece, austerity-related conditionalities mandating deep cuts in public spending that'll affect workers are unpopular. Protests against them may not subside anytime soon. It's also felt that easy aid flow to loan-hungry European nations could deepen their long-term indebtedness apart from fuelling inflation, unless fiscal discipline and institutional reform go hand in hand.

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For India, the EU's a hefty trade partner and investor. Besides, Europe makes for over a fourth of its exports. So, we can't but be concerned how the Greek drama plays out. But if the issue is contagion, it may be said that India's relatively insulated. If anything, since the US subprime crisis broke in 2008, emerging economies and growth engines like India and China have looked in top form as investment destinations. Concerning Greece's more recent turmoil, policymakers rightly say India's stock can only rise further with global funds seeking secure parking lots. It's no accident the government is said to be considering hiking the FII limit in the domestic debt market.

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