By now almost everyone will know the entire Greece story and if you don’t then please do read some economic news on the world. The effect of the controversy on one country (Greece), one region (European Union), one currency (Euro) and million of people is unbelievable. Not really unbelievable … because this has happened to countries before but everytime the nuances are different. The important thing is to get a few lessons from the entire debacle specially for India!

• Taxation System: I read last week that Greece has over 11 million residents but only only a few thousand claim to have an income above 100,000 euros. Is it really possible? Nevertheless if residents can get away without paying taxes then they will. For now India also has a taxation system full of loopholes, where anyone with a big company has to pay taxes but small/big business don’t and black money is prevalent. Government needs taxes and without taxes budget deficit cannot be reduced.
• Importance of Currency: One of the main issues facing Greece is the issue of currency! Greece comes under European Union and has Euros as its currency. If Greece had an independent currency then it could have taken a hit on its currency, exports become cheaper, imports become expensive, the life in the country changes but it would not be as complex as it is.
• Market will not always be rational: A lot of people ask that why has the focus on Greece come now? Why didn’t it come last year? The budget deficit was still very large last year. All the existing problems have existed for many years. Thus why now? Its because markets are not always rational and we all should be used to it. The bandwagon effect is most prominent in financial markets and when a run begins it is very .. very .. very difficult to fight it even for nations.
• Don’t spend more than you earn: This is very difficult to maintain specially for Governments but if you continuously do it for years then what can you do.

This is definitely not an exhaustive list. Would be great to hear your views as well!

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