Gurpartap Singh

Assistant Professor
Chandigarh Business School, Landran (Mohali)
mr.gurpartap.singh@gmail.com
Introduction






We will try to understand the impact
of the global financial crisis on the
Indian economy in the light of the
recent happenings.

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.
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.

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

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
Impact on various industries
Steel manufacturers,
Textile Sector, Hosiery,
Sports Goods,
IT, ITeS, BPO, KPO,
Diamond Exports,
Real Estate, and many others
have started feeling the heat

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

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.

k
Prime Minister
Growth Rate 7.5 to 8 percent
Country not immune to what happens in the
world
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
Dr Rajiv Kumar, Director and Chief
Executive, ICRIER
A growth of not more than 7.8 per cent in
the present year.
Dr L.K. Malhotra, President, PHDCCI
India may not be able to remain untouched
by the financial turmoil in the US. Exports
from India are also likely to be hit if major
economies go into recession.
Sajjan Jindal, President , ASSOCHAM
India will see downturn and it will be an
uphill task for the government to bring
back the economy on rails


oWeaknesses of structured
products and derivatives
oImportance of Financial
supervision
oInter-agency coordination
required
oWe can not remain
insulated

Whats in the store
As per a report prepared jointly
by World Economic Forum (WEF)
and Confederation of Indian
Industry (CII), the global crisis
will hit India more in 2009.
At the global level also, Olivier
Blanchard, the IMFs chief
economist has said that worst
of financial crisis yet to come
and economic growth would not
kick in until 2010



The Indian economy is already under the
impact of global financial crisis.
Government has taken various steps but as
of now there are no signs of recovery.
Share prices have 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.