But quite surprisingly, Monday also ended with yields declining on government bonds in Italy, Spain and Portugal! This was most unexpected because these economies could be considered most vulnerable to a contagion from Greece

It is clear that the European Central Bank (ECB) and national monetary authorities have worked out a strategy to intervene heavily in government bond markets and prevent even the most vulnerable economy Italy, with public debt of more than 300% of GDP, from being impacted by Ultimately, Greece did not have the dubious advantage of being too large to fail – the proud Greeks themselves will have to bear the huge costs of utter dishonesty of their businessmen and policy makers

Greek contagion. ECB has had a long time to refine its response to a Greek default and it has clearly used its time to good effect.

Greece, with its GDP accounting for a mere 2%, is a very small part of the European economy. Its share of aggregate European public debt is similarly tiny. Moreover, 60% of Greece’s outstanding public debt of 323 billion euros is owed to official agencies like the European Stability Fund, EU’s Special Greek

Facility and ECB. Financial markets seem to be signalling a Grexit will not bring down the European monetary union.

Only about 16% of Greek sovereign bonds are owed to private banks, mostly French and German. These will either be secured by their respective governments or will be seen or will be seen as far too small to have any major impact financial markets and economy.

Ultimately, Greece did not have the dubious advantage of being too large to fail. So the global economy and India will be spared the trauma of another financial sector meltdown as in 2008. However, the proud Greeks themselves will have to bear the huge costs of utter dishonesty, chicanery and anti-national behaviour in the past of their businessmen and policy makers.

India has marginal direct exposure to Greece. A global or even a European contagion from a probable Grexit looks unlikely. Therefore, our policy makers in North Block and Mint Road need not be distracted by some degree of equity markets volatility.

India is not likely to suffer from capital flight to safety as our macroeconomic conditions are sound and medium term economic prospects look promising. This is a huge turnaround from 20 months ago when India was the most vulnerable among the ‘fragile five’ Brics economies.

The Greek drama will hopefully prod us into re-examining India’s position in the global economy and taking necessary steps to exploit the opportunities offered by global markets, which may be in slow motion but still offer huge scope as our share of global trade remains an abysmal 2% or less.

We should aggressively expand public capital spending to improve infrastructure and trigger private investment, which remains weak. The relatively slower growth of aggregate world demand and volatility in foreign exchange markets requires a sharply focussed policy response to improve the competitiveness of both services and merchandise exports and expand our market shares. That is a direct and unambiguous lesson for us from the current Greek tragedy.

The writer is Senior Fellow at Centre for Policy Research and Founder Director of Pahle India Foundation