'India should be ready with contingency plan on Brexit'

New Delhi: Government must put in place a contingency plan to fight off the volatility arising out of the referendum on 'Brexit' slated for Thursday as it is bound to unnerve the global financial markets, an industry body said Tuesday.

"In the medium to long term, the funds shuffled in an uncertain Britain and European markets could find way into the Indian markets, but in the immediate term, anything can happen and as a credible economy, we have to be ready and be on top of the situation," Assocham said, adding it has full confidence in RBI Governor Raghuram Rajan to deal with the fast unfolding global events.

Anticipating a close call between the 'leave' and 'remain' votes in the referendum, the chamber observed that there could be an upheaval in the financial markets out of sheer panic, at least in the short term.

It said the Brexit event is coinciding with the concerns over a possible outflow of USD 20 billion due to redemption of the FCNR deposits, though the current account situation at this point of time is quite comfortable, thanks to lower bill of imported crude oil for the last over 18 months.

"With London being a nerve centre for the global firms, a fear factor has gripped the entire financial world. As a key emerging market and the one which is being preferred by the global fund managers, India could witness wild fluctuations or large outflows in sync with an overall trend. That is something to watch out for," the industry body said.

The RBI, it said, is expected to be ready with a contingency plan for effective intervention if there is a pressure on the dollar supply because of outflows of funds from the emerging markets.