Amid concerns that the Greek debt crisis will further impact Indian stock market negatively and lead to lower forex reserves, Reserve Bank of India deputy governor Subir Gokarn on Monday said emerging markets like India are likely to see capital outflow due to the crisis.
?There might be some nervousness among investors worldwide which might provoke capital outflows from emerging markets in the short run, so there is a risk of short-term vulnerability of capital outflows,? Gokarn said. ?Stronger performing economies may see capital inflows because there may not be many countries where money can go,? he added.
The net capital outflow, in turn, is likely to impact the rupee-dollar equation in the short-term. ‘There could be a strengthening of dollar against all other currencies,? he added.
The impact on India will not be, however, severe in the long term, and the high manufacturing prices will be considered for policy-making, Gokarn said. ?Long-term perspective impact is not going to be severe on India as this crisis will not be disruptive to global growth. Of course, this is based on the assumption that it will be managed properly, sooner than later.?
Present at an interactive session organised by the Indian Chamber of Commerce, Gokarn said the Reserve Bank of India (RBI) will study the change in the demand pattern of food. ?We are studying what is causing food inflation, and a report will be submitted shortly,? he said.
Gokarn felt that there have been changes in the food-demand pattern in the country. That leads to a study to find out whether the change is a ?long-term phenomenon or a monsoon-based short-term one.?