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The Greek debt contagion is unlikely to impact the country's economy or markets in the long term. However, in the short run there might be some hiccups in the form of some likely capital outflows, top policy makers said on Monday. Finance secretary Ashok Chawla said he expected the Greek sovereign debt crisis to have a minimal impact on India. Similar views were echoed by the RBI as well. Deputy governor Subir Gokarn believes there may not be any impact in the long term. "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.Talking about the debt market in the country, Chawla said that the government is looking at raising the FII investment limit in debt. At present, there is a cap of $5 billion on FII investment in case of government debt and $15 billion in case of corporate debt. Meanwhile, the benchmark Sensex soared by 561 points, the biggest single-day gain in nearly 10 months, on Strong buying support from foreign institutional investors. Since 2010, the time around which fears of sovereign debt crisis in Europe began to appear, there was a net inflow of foreign institutional funds into the Indian capital markets till April-end, which was Rs 54,606 crore.
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