IDEAS home Printed from https://ideas.repec.org/p/ris/adbiwp/0164.html
   My bibliography  Save this paper

The Global Economic Crisis: Impact on India and Policy Responses

Author

Listed:
  • Kumar, Rajiv

    (Asian Development Bank Institute)

  • Vashisht, Pankaj

    (Asian Development Bank Institute)

Abstract

India's financial sector is not deeply integrated with the global financial system, which spared it the first round adverse effects of the global financial crisis and left Indian banks mostly unaffected. However, as the financial crisis morphed in to a full-blown global economic downturn, India could not escape the second round effects. The global crisis has affected India through three distinct channels: financial markets, trade flows, and exchange rates. The reversal in capital inflows, which created a credit crunch in domestic markets along with a severe deterioration in export demand, contributed to the decline of gross domestic product by more than 2 percentage points in the fiscal year 2008–2009. In line with efforts taken by governments and central banks all over the world, the Government and the Reserve Bank of India took aggressive countercyclical measures, sharply relaxing monetary policy and introducing a fiscal stimulus to boost domestic demand. However, this paper argues that with very limited fiscal maneuverability and the limited traction of monetary policy, policy measures to restore the Indian gross domestic product growth back to its potential rate of 8–9% must focus on addressing the structural constraints that are holding down private investment demand.

Suggested Citation

  • Kumar, Rajiv & Vashisht, Pankaj, 2009. "The Global Economic Crisis: Impact on India and Policy Responses," ADBI Working Papers 164, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0164
    as

    Download full text from publisher

    File URL: http://www.adbi.org/working-paper/2009/11/12/3367.global.economic.crisis.india/
    File Function: Full text
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kucera, David. & Roncolato, Leanne. & von Uexkull, Erik., 2010. "Trade contraction in the global crisis : employment and inequality effects in India and South Africa," ILO Working Papers 994594013402676, International Labour Organization.
    2. Reddy, Kotapati Srinivasa & Nangia, Vinay Kumar & Agrawal, Rajat, 2014. "The 2007-2008 global financial crisis, and cross-border mergers and acquisitions: A 26-nation exploratory study," MPRA Paper 60148, University Library of Munich, Germany.
    3. Kucera, David & Roncolato, Leanne & von Uexkull, Erik, 2012. "Trade Contraction and Employment in India and South Africa during the Global Crisis," World Development, Elsevier, vol. 40(6), pages 1122-1134.
    4. Bhuyan, Biswabhusan & Sethi, Dinabandhu, 2016. "An Augmented Taylor rule for India’s Monetary Policy: Does Governor Regime Matters?," MPRA Paper 75287, University Library of Munich, Germany.

    More about this item

    Keywords

    india global financial crisis; gdp growth;

    JEL classification:

    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • G01 - Financial Economics - - General - - - Financial Crises

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:adbiwp:0164. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ADB Institute). General contact details of provider: http://edirc.repec.org/data/adbinjp.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.