India's new chief economic advisor (CEA), Raghuram Rajan opined that, despite India’s reduced trading exposure to Europe, the country is likely to get impacted by the Euro-zone crisis, hence should not treat the phenomenon lightly.
The CEA pointed out that India, which has lessened trades with Euro zone, has been concentrating more on emerging markets in the Middle-East and Asia, which has direct or indirect trade exposure with Europe. And, warned that isolation provides no protection from global economic crisis. Raghuram noted that the linkages between banks of India and Europe banks, might affect the former adversely if the crisis worsens.
He also suggested that the emerging markets like India have to concentrate much on building investors’ confidence as more money flows to the rich economy assets and to developed countries considering safe bets.
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