Effect Of Financial Crisis On Indian Economy

Effect Of m integritytary Crisis On Indian EconomyIntroductionFinancial Crisis a very common word heard in the fresh fewer years. Year 2008, the beginning of the credit crunch. It was like Tsunami waves which took away nearly everything from the economies. Recession rat be defined as significant make up in the economic activity lasting more than a few months, which is normally visible in real gross domestic product, real income, employment, industrial production, imports-exports, and wholesale-retail sales. tidy developed economies like US and the Euro ara were not able to supremacy or reduce the put of nook. The emerging economies like China, India and Brazil tied(p) though change by recession plainly kept a good control over it. Through this look into dissertation, I urgency to discuss the egress of fiscal crisis on a developing terra firma. So, I earn chosen India to discuss this handic.India is one of the aright emerging economies in the world. In the recen t years, India has shown a significant growth in gross domestic product and overall. With recession and its effect overall the world, India with its good policies was able to prevent recession from entering into the deep roots of the country. Even though we can vocalise financial crisis didnt affect India but still on that point are near sectors badly touch on by the crisis. So I basically I would be discussing about the effect of financial crisis on India and the transmission of crisis from developed countries to India.Literature ReviewThe publications review for this research includes the effect of financial crisis on the gross domestic product growth judge of the country. The GDP growth rate of India was increasing at a rapid rate but showed a down-turn due to the after effect of recession. The GDP growth rate of the country was above 8.5% in 2010 and it was reduced to 8.2% at the start of 2011. The GDP was bear upon because of the countrys globalisation. In the last decad e the countrys integration into the world frugality was authentically fast. Due to this rapid growth, the percentage of imports-exports, as a proportion of GDP grew from 21.2% in 1997-98 to 34.7% in 2007-08. This growth shows the immense growth of economic system. During the period of 2003-08, the enthronizations divvy up in GDP increase by 11%. Domestic currency was available in bulk but still it was expensive than abroad funding. The growth potential of India was unanimous in the global market, so the opposed investors were ready to provide funds at lower cost and thereby take risk. Because of this globalisation the financial crisis on the global preservation relate the Indian economy.Countrys banking sector is relatively one of the healthy sectors in the economy and when the recession effect came to India both the Government of India and RBI (Reserve Bank of India) responded to the altercate in coordination and consultation. The actions of RBI comprised of monetary ac commodation and counter cyclical regulative forbearance. RBI measures helped the financial sector of the country to increase the initial particular liquidity which amounts up to 7% of countrys GDP. This shows how the banking sector of India controlled the effect of financial crisis.On the other hand, the economic activities of the country were slowing down. As the real GDP rate was diminished, the service sector, in which India is one of the best due to the powerful human resource, was affected. The service sector includes construction, transport communication, trade, hotels and restaurants sub-sectors. Business outsourcing is another major(ip) services provided by India. Most of the business outsourcing was done for US companies but due the financial crisis, this section affected badly. This in turn has affected the employment sector of the country. India is a country with high population, so a slight increase in the unemployment means so many of them has muddled jobs. This mus t be the first time in seven years, exports have declined terribly. The industrial production index has also showed a negative growth. The doubt around the recession has decreased the business confidence.And the country has a decelerated investment demand. Before recession, Foreign Institutional Investors (FII) was the bulk buyers in the Indian pains market. They bought huge number of shares by investing millions of dollars, as Indian economy was a developing at a rapid rate. But the subprime crisis affected them very badly. Some of the companies were short of cash, whereas others were trapped with bad debts. Even there are companies which had to declare bankruptcy. These after effects had a great impact on the Indian stock markets.The adverse effect of financial crisis on the economic growth of the country can affect the poor and the nutrition security of the country. The increase in aliment price in India was relatively lower than that of global food prices. When the price of food globally increased by 150%, in India it was just 23%. This happened between 2005 and spot quarter of 2008. After that, there was a decline in the food prices but it is still much higher than that at the beginning of the decade. If compared, the splashiness of food articles was 10% and that of general inflation was 6%.India is one of the top receivers of immaterial remit. India secure the first position with 17.4 billion US $ in 2003. Middle-east is one of the main destinations for migrants from India. But after financial crisis, the Gulf countries, principally UAE got affected badly. UAE is one of the countries, where we can find a lot of Indians in the construction sector which went down after the crisis. This has affected the flow of remittance from UAE to India. According to World Bank the remittance flow to developing countries can go down by 7%-10%. This will affect the foreign exchange reserve and investment sector of the country.While concluding the literature part , it is clear that Indian economy was affected badly. But due to strong policies and high liquidity, the government was able to reduce the after effect to an extent.methodological analysisThrough this topic I would like to find answers for some questions. They areWhat are the effects of global financial crisis on Indian economy?How did crisis affect Indian economy?What are the precautions and measures taken by the answerable authorities against crisis?In order to discuss these questions, I would like to research online as well as books newspapers, so that I get a clear-cut idea on financial crisis and Indian economy. Financial crisis is a familiar topic, so the details about it are available online. To do this research dissertation, online details are not enough, but interview with interested persons will be useful for the project. When the research is done about the effect on Indian economy, the economy is divided into different sectors. Banking sector is one sector which was suc cessful in preventing the recession effect. Giving more richness to Banking sector will be good enough to explain the effect on Indian economy.