Global Financial Meltdown: Causes and Impacts on India

Posted: 9 Dec 2009

See all articles by Amit Kumar Kashyap

Amit Kumar Kashyap

Nirma University; NLUJ; School of Law, Manipal University Jaipur

Date Written: December 9, 2009

Abstract

India’s engagement with the global economy became deeper from the 1990s. Now the global economy has great impact on Indian economy too. The global crisis has hit India through a "sudden stop" of capital inflows and a collapse of both external and domestic demand. India's growth rate in 2008-09 was 6.7 per cent as compared to 9 per cent in the previous year. The Indian financial system is not directly exposed to the "toxic" or "distressed" assets of the developed world. This is not surprising since Indian banks have very few branches abroad. However, the indirect impact on the economy because of the recession abroad is very much there. The "decoupling" theory does not hold well. The deepening global integration of India has made it vulnerable to the global financial crisis. However, three factors helped India to cope with the crisis and soften the blow. They are: (1) the robust, well capitalized and well-regulated financial sector; (2) gradual and cautious opening up of the capital account; and (3) the large stock of foreign reserves.

Keywords: Recession, India, Bank

Suggested Citation

Kashyap, Amit Kumar, Global Financial Meltdown: Causes and Impacts on India (December 9, 2009). Available at SSRN: https://ssrn.com/abstract=1520931

Amit Kumar Kashyap (Contact Author)

Nirma University ( email )

Sarkhej-Gandhinagar Highway
Gota
Ahmedabad, Gujarat 382 481
India
07600377946 (Phone)
382481 (Fax)

NLUJ ( email )

Jodhpur
Mandore Road
Jodhour, Rajasthan
India

School of Law, Manipal University Jaipur ( email )

Jaipur Ajmer Highway
Jaipur, RI
India

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