Special Correspondent

NEW DELHI: Union Finance Minister Pranab Mukherjee on Wednesday maintained that Indian markets cannot be immune to the debt problems in Europe and its impact will be felt in case the $1 trillion bailout package worked out by the European Union (EU) and the International Monetary Fund (IMF) fails to instil confidence.

Mr. Mukherjee's statement, attributing the problem of sovereign debt crisis, especially in Greece, to initial hiccups in the integration process of Europe, has come close on the heels of Finance Secretary Ashok Chawla going on record earlier this week that India would remain immune to the debt crisis in Greece.

Responding to a query at the CII annual session here, Mr. Mukherjee said: “If the bailout package does not inspire confidence in the market, being far away, having no physical connectivity, Indian market gets disturbed. This is a problem of the global linkage which cannot be avoided”. He, however, hastened to add that if the bailout package was seen as attractive and injects confidence in the market, India's market would also move up.

Integration

Last week, the Bombay Stock Exchange's sensitive index (Sensex) slumped by 789 points in tandem with global markets on fears of Europe being faced with prospects of a protracted debt crisis.

However, with the 27-nation EU along with the IMF working out and unveiling a $1-trillion (euro 750 billion) crisis fund on Sunday to protect the euro and help bail out heavily indebted economies, the Sensex surged by 561 points in keeping with the bounce back in global markets.

Analysing the Eurozone crisis, Mr. Mukherjee said: “The problem of European integration and particularly those who are yet to be fully integrated in all its aspects and more and more ... the new countries are providing in course of time some sort of uncertainty and with the global linkage, naturally it would have its impact”.

Mr. Mukherjee, however, pointed out that the financial situation would improve once complete integration within the Euro zone was achieved.