The Global Crisis And Indian Finance

Initially, it was speculated that India would be totally immune to Global Financial Downturn. It is clear that important elements of the balance of payments and the domestic financial sector have been affected. The impact of such imbalance lead to implications in banking sector and has consequently lead to credit crunch.

The Chinese government, seriously noting the collapse in imports, has brought in a range of extensive fiscal and monetary measures designed to counteract the effects of the global downturn. As explained in my previous Post.

Recession has lead to downturn in many of the highly "Trade Integrated" economies of Southeast Asia that has sent in alarming signals and harsh indicators in those countries with no fault of theirs.

The current slowdown in Gross Development Product (GDP) is sharper than the Government would like to admit, and more significantly it has been accompanied by a much steeper than expected reduction in employment, especially in export sectors leading to volatility in economic infrastructure.

Some of the most important effects have been:

Decline in Foreign Exchange Reserves.



Decline in Stock Market Indices (BSE).



Weakening of Rupee in consideration to US Dollars.



Foreign Institutional Investors and Stock Market.