Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 23, No. 1, pp.79-121
ISSN: 1225-0279 (Print)
Print publication date 28 Feb 2010
Received 09 Oct 2009 Revised 20 Jan 2010

The Indian Response to the Global Financial Crisis

Sumanjeet Singh
Assistant Professor, Department of Commerce, Ramjas College, University of Delhi, Delhi-7, India, Tel: +91-92-1532-6126 sumanjeetsingh@gmail.com

JEL Classification: E6, E10, E44, G33, G3

Abstract

The effects of the global financial crisis have been more severe than initially forecast. By virtue of globalization, the moment of financial crisis hit the real economy and became a global economic crisis; it was rapidly transmitted to many developing countries. The crisis emerged in India at the time when Indian economy was already preoccupied with the adverse effects of inflationary pressures and depreciation of currency. The crisis confronted India with daunting macroeconomic challenges like a contraction in trade, a net outflow of foreign capital, fall in stock market, a large reduction in foreign reserves, slowdown in domestic demand, slowdown in exports, sudden fall in growth rate and rise in unemployment. The government of India has been highly proactive in managing this ongoing crisis with a slew of monetary and fiscal measures to stabilize the financial sector, ensure adequate liquidity and stimulate domestic demand. As a result of this combining with many several structural factors that have come to India’s aid, India's economic slowdown unexpectedly eased in the first quarter of 2009. The present paper makes an attempt to assess the impact of global financial crisis on the Indian economy and discuss the various policy measures taken by government of India to reduce the intensity of impacts. The paper also highlights recovery of Indian economy from crisis and in the end of paper concluding remarks are given towards.

Keywords:

Crisis, India, Impact, Policy, RBI

Acknowledgments

While bearing full responsibility for any mistakes, I wish to thank Prof. L. N. Dahiya; Prof. S. D. Vashistha and Richard Nyangosi for reading the earlier versions of this paper and making a number of helpful comments and constructive criticisms. However, I am solely responsible for all the remaining errors and inadequacy.

References

  • ADB. South Asia Forum on the Impact of Global Economic Crisis and Financial Crisis. Project No. 42502, Research and Development Technical Assistance, Asian Development Bank, 2008.
  • Chandrasekhar, C. P. Global Liquidity and Financial Flows to Developing Countries: New Trends in Emerging Markets and Their Implications. G-24 Working Paper, Available on http://www.networkideas.org/featart/jul2008/fa29_G24.htm, , 2008.
  • Hamilton, J. D. Understanding Crude Oil Prices. NBER Working Paper No. 144492, Cambridge, Massachusetts: NBER, 2008. [https://doi.org/10.3386/w14492]
  • Jha, Raghbendra. The Global Financial Crisis and Short Run Prospects for India. Working Paper, Australia South Asia Research Center, Australia National University, Australia, 2009. [https://doi.org/10.2139/ssrn.1392537]
  • Mishra, B. M. Global Financial Crisis and Monetary Policy Responses: Experience from India. Paper Discussed on Breakout Session on Monetary Policy in Regional High-Level Workshop on Strengthening the Response to the Global Financial Crisis in Asia-Pacific: The Role of Monetary, Fiscal and External Debt Policies, ESCAP, Dhaka, Bangladesh, July 27-30, 2009.
  • Nachane, Dilip. “The Fate of India Unincorporated.” Economic and Political Weekely XLIV (No. 13 2009): 115-22.
  • Nanto, D. K. The Global Financial Crisis: The Analysis and Policy implications. Congressional Research Services, RL 34742, 2009.
  • Panagariya, Arvind. India: The Emerging Giant. New York: Oxford University Press, 2008.
  • Park, Jae-Ha, and Lee, Sangche. “Global Financial Crisis: Background, Prospects, and Its Impacts on Korea.” Seoul Journal of Economics 22 (No. 1 2009): 77-94.
  • Pradhan, Jaya Prakash. Growth of Indian Multinationals in the World Economy: Implications for Development. Working Paper No. 2007/04, Institute for Studies in Industrial Development, New Delhi, March, 2007. [https://doi.org/10.2139/ssrn.1515650]
  • Rakshit, Mihir. “India Amidst the Global Crisis.” Economic and Political Weekly 28 (No. 13 2009): 94-105.
  • Rao, Govinda. Third Stimulus Package and Fiscal Conundrum. Business Standard, August 27, 2009.
  • Sumanjeet, Singh. “Foreign Capital Flows into India: Compositions, Regulations, Issues and Policy Options.” Journal of Economics and International Finance 1 (No. 1 2009a): 14-29.
  • Sumanjeet, Singh. Depreciation of the Indian Currency: Implications for the Indian Economy. Working Paper No. AIUB-BUS-ECON-2009-04, American International University, 2009b.
  • UNCTAD. Global Economic Crisis: Implications for Trade and Development. Trade and Development Board, GE09, First Session, Trade and Development Commission, Geneva, 2009.
  • WEO. Crisis and Recovery. World Economic Outlook, International Monetary Fund, April, 2009.