GLOBAL CRISIS AND INDIA: UPSC AND BPSC MAINS EXAM.

NOTE:- THE SOURCE OF DISCUSSION IS BASED ON ECONOMIC SURVEY AND BUDGET OF INDIA, AND VARIOUS REPORTS AVAILABLE ON INTERNET.

FURTHER DISCUSSION ON GLOBAL CRISIS AND INDIA:

Many have in mind, the crisis did impact India as well as other Asian economic entities basically focusing on china with a "slowdown" in their growth but not a contraction of output, in all these economies. the further impact was there but less fierce than that experienced by economic giants such as the US and European Union. As said previously, this was a financial sector crisis and the Indian financial system was less affected, which has again given the dominance of the public sector banks, which are less exposed to complex risk products, not having taken on to much debt fairly risk-averse and not much exposure to international markets and products.

one has fair means to ask, what the crisis did to India was to plunge the domestic financial sector into a "heedful" and wait and watch mode, become averse to lending.

It did impact some of the private and foreign banks in India but not to the same intensity, as such exposure was limited and small in relation to their balance sheet size. this force tightening of the liquidity by banks, parched up money with industrial sectors which is any case, has also gone in the heedful mode.

Both these resulted in the build-up of inventories, huge amounts of production and repayment cycles, and the slowdown of industrial and all-inclusive growth of the Indian economy. it is evident from recurring occurrences that the banking sector was on the verge of downfall due to default and build-up of bad loans, which could have amalgamated the problem manifold and impacted, far ahead greater.

The financial sector was fortunate to have a limited impact in the sense that no bank or any financial institution collapsed, however, it did indent export, as for the first time, in over a decade or so, there was a decline in export. but this decline was not sufficient, to contract overall output, given the relatively low share of exports to the total output of the Indian economy.

so overall, the impact on India was that it put in the minds of people "fear and uncertainty" resulting in a slowdown and surely impacting exports for a short period of six months. The fallout and slowdown could have greater and deeper both for the global economy as well as for Indian economy, but for "timely " and  " collective"  govt. interventions both in India and major economics of EU, US, and Japan.