India's economy amidst the global economic crisis

The world's economy is in crisis for over five years; consequently, many of the countries of this world are witnessing unprecedented fall in output, trade and employment since 2008; and India's economy is no exception. This study with the available sources of data finds that the decoupling hypothesis regarding Indian economy failed and India's economy too is in the grip of crisis. However, the moderation in India's economy growth rate during the crisis period is more due to the weakness in the inherent structural factors and to a very less extent due to exogenous factors. The Indian economy in recent years is bedevilled with low rate of capital formation, decline in manufacturing and moderation in services sector growth coupled with stagnancy in the private consumption expenditure. Also, India's exports are witnessing decline, more with those nations with whom India has free trade agreements, without any concomitant decline in imports, which has severely impacted India's balance of payments situation. In addition, the continuing political instability and the inward looking policies of the government in recent years has added to the decline of India's output and consequently affected its scope of employment generation and poverty reduction.