global financial crisis and india

8/10/2019 Global Financial Crisis and India

1/15

Global Financial Crisis:

Impact on

Indian Economy

Gurpartap Singh

Assistant Professor

Chandigarh Business School, Landran (Mohali)

[email protected]


2/15

Introduction

We will try to understand the impact

of the global financial crisis on the

Indian economy in the light of the

recent happenings.


3/15

Impact on the Indian Economy

The global financial crisis has already

affected our economy on various fronts.

The information gleaned from Business

pages of

The

Tribune

Chandigarh,

between Oct. 1 and Nov. 22, 2008, points

towards the extent of the problem.
http://www.indiabuzzing.com/wp-content/uploads/09sensex1.jpg


4/15

The Key Pointers

Fall in Share Prices

After gradual fall in the

previous weeks, the sensex

fell to 8510, on 27.10.08,

the lowest in 5 years

Fall in Rupee

On 21.11.08, Rupee hits

record low of 50.20, against

the greenback.
http://www.indiabuzzing.com/wp-content/uploads/09sensex1.jpg


5/15

The Key Pointers

Impact on Exports

Exports are likely to slide by

20 per cent of its target of

200 billion in 2008-09

Fall in Forex Reserves

Forex reserves dropped by

nearly 8 billion in early

October, to 284 billion


6/15

The Key Pointers

FDI Inflow

Global meltdown may slow down

FDI inflows.

Job Loss

Across all sectors

manufacturing,

retail, realty, IT and BPO, banking

and financial services

Economic Growth

Slow down has begun and growth

will drop to about 7 percent, for the

first time in 3 years


7/15

The Key Pointers

Impact on various industries

Steel manufacturers,

Textile Sector, Hosiery,

Sports Goods,IT, ITeS, BPO, KPO,

Diamond Exports,Real Estate, and many othershave started feeling the heat


8/15

Action by Govt.

SEBI eases Participatory-Note norms,

Lifts 40 percent cap on overseas

derivative instruments

RBI injects 20,000 crore for Mutual

Funds

The CRR, the amount banks are

required to keep with the apex bank,

has been cut from 9 per cent earlier to

5.5 per cent in three tranches.

Short-term lending (repo) rate also

reduced
http://isebindia.com/graphics/goi_emblem.gif


9/15

Action by Govt.

Rs 25,000 crore against farm debt

waiver

A temporary 1 per cent reduction in

SLR announced last month would be

made permanent.

High-level panel to address industrys

woes

Market regulator SEBI is keeping

vigilant eye on short-selling and on

the settlement mechanism.
http://isebindia.com/graphics/goi_emblem.gif


10/15

Government SpeakPrime Minister

Growth Rate 7.5 to 8 percentCountry not immune to what happens in theworld

Finance Minister

P. Chidambaram

Adequate liquidity in the banking system

Advised banks to lend aggressively

Asked investors not to sell stocks in panic

Commerce and Industry Minister - Kamal Nath

Financial crisis may slow down FDI inflows.

Planning Commission Dy. Chairperson - Montek

Singh Ahluwalia

Global meltdown to hit growth


11/15

Expert Speak

Dr Rajiv Kumar, Director and Chief

Executive, ICRIER

A growth of not more than 7.8 per cent inthe present year.

Dr L.K. Malhotra, President, PHDCCI

India may not be able to remain untouchedby the financial turmoil in the US. Exportsfrom India are also likely to be hit if majoreconomies go into recession.

Sajjan Jindal, President , ASSOCHAM

India will see downturn and it will be anuphill task for the government to bringback the economy on rails


12/15

Lessons Learnt

o

Weaknesses of structured

products and derivatives

oImportance of Financial

supervision

oInter-agency coordination

required

oWe can not remain

insulated


13/15

Whats in the storeAs per a report prepared jointly

by World Economic Forum (WEF)and Confederation of IndianIndustry (CII), the global crisis

will hit India more in 2009.At the global level also, OlivierBlanchard, the IMFs chief

economist has said that worstof financial crisis yet to come

andeconomic growth would notkick in until 2010
http://images.google.com/imgres?imgurl=http://library.bfn.org/sept11/money.gif&imgrefurl=http://library.bfn.org/sept11/impact.htm&usg=__wqDCY9iZQnR4RT1GzWP9UEgfi70=&h=364&w=334&sz=26&hl=en&start=2&sig2=A-48JUsi3cpjPuF-wU6K2w&tbnid=JiXZFsdgrFOVAM:&tbnh=121&tbnw=111&ei=TbM0ScjVN4K0kAX-hbCXCA&prev=/images%3Fq%3Deconomic%2Bimpact%26gbv%3D2%26hl%3Den


14/15

ConclusionThe Indian economy is already under the

impactof global financial crisis.

Government has taken various steps but as

of now there are no signs of recovery.

Share priceshave steadily fallen,rupee has

lost ground to the dollar, exports have been

hit, various sectors of the economy have

seen decline in demand and even the Prime

Minister has gone on record to say that that

India has to bear the pain.

The point is that we have to live with the

present scenario for some more time to

come.
http://images.google.com/imgres?imgurl=http://library.bfn.org/sept11/money.gif&imgrefurl=http://library.bfn.org/sept11/impact.htm&usg=__wqDCY9iZQnR4RT1GzWP9UEgfi70=&h=364&w=334&sz=26&hl=en&start=2&sig2=A-48JUsi3cpjPuF-wU6K2w&tbnid=JiXZFsdgrFOVAM:&tbnh=121&tbnw=111&ei=TbM0ScjVN4K0kAX-hbCXCA&prev=/images%3Fq%3Deconomic%2Bimpact%26gbv%3D2%26hl%3Den


15/15

global financial crisis and india

Documents