Is India Ready for the Collapse of Eurozone?

Recently Spain was facing a debt crisis and it received 100 billion euro to bailout itself from the crisis and now it is the fourth largest economy in the Euro zone to seek the international bailout to stay alive. At this news there has been an outburst in the global economy. Andrew Benito of Goldman Sach said, “We view this as a positive near-term development for Spain, and in particular for its banks. But it does not solve Spain’s overall fiscal and macroeconomic challenges, which remain substantial.”

He continues, “Will this step be sufficient to forestall a broader programme for Spain with additional conditionality? By itself: No. Instead, in our view it needs to be accompanied by a fiscal plan specifying fiscal measures that will set Spanish debt on a sustainable path in the medium-term. This is still less of a euro area-wide solution, but continues in the spirit of a country-by-country approach.” He further adds, “The lack of a medium-term plan to stabilize its debt-to-GDP ratio over the next 5 or so years. The weekend’s announcements will do little to change that.”

One of the Finance Ministry Official told Times of India, “We are already preparing technical analysis for different possible scenarios that could impact India trade, stock markets and financial institutions.” He added, “We are facing a fast-evolving situation. The question is not only about the exit of Greece from the Euro zone, but whether the Euro zone will be able to hold as a fiscal entity.” The officials said that rather than planning a conference to discuss the crisis the G20 major economies were preparing for the Mexican summit.