1. First, it's about capital crunch and investor shyness to invest any further given the uncertainty in Europe. Especially, after Italy entered the red zone, there has been severe impact given the size of its economy. Since, India needs investment this hour, the holding up of capital is hurting us.
2. Second problem relates to much diminished consumption in the affected zone due mainly to government's austerity drive. This affects our exports especially when our trade balance is not very comfortable.
3. Third thing is as the international agencies like IMF and even ECB pumps in hundreds of billions into the affected countries, it results in crowding out of capital.
4. Fourthly, an environment of uncertainty is generally bad for economy. It affects production, consumption as well as investment.
5. banking crisis. some european banks are present in india. it will affect the credit flow to the industries hence affecting industrial output
6. Oil & commodity prices may ease thereby helping to soothe inflationary pressures
7. Remittances and NRI deposits which are sourced from crisis hit countries, may reduce.
No comments:
Post a Comment