impact on India:the linkages

crisis in an economy impacts other economies via three channels Trade Channel:- it impacts the affected countrys trading partners too. exports/imports of its trading partners Financial Channel:- Apart from movement in financial markets, three kinds of financial flows could impact Indian financial markets: Foreign Direct Investment: Foreign Institutional Investment External Commercial Borrowings Remittances and NRI deposits
Confidence channel:- This channel shows confidence declines in business and households seeing the global uncertainty.

Impact on Indian economy

What impact the Euro crisis is likely have on Indian economy, since the epicenter of the crisis is far away in Greek capital Athens Perhaps not be any direct impact on the Indian economy from the European crisis. However, with the increasing integration of the world economies, would have its impact on the Indian economy as well. Despite the assurances, the markets are reacting sharply, showing huge decline. The investments might not increase seeing the global uncertainty. Investment was a key driver in Indian 9% growth period (2003-08). IIP could again decline as it did post-September 2008 crisis. Credit growth could decline both because of banks becoming uncertain and business not demanding credit Foreign capital inflows could reverse to an outflow position.. The expectations of BSE Sensex reaching soon to 21,000 levels are being revised downwards. The volatility is again increasing