Global Economic Crisis: Impacts, Challenges and Opportunities for India

Today India is more integrated with the world economy through both the current and capital accounts. The unfolded global financial crisis has come in various forms and represented many challenges as well as opportunities in India. The Indian economy has shown considerable resilience to the global economic crisis by maintaining one of the highest growth rates in the world. Economic growth stood at 8.6 percent during fiscal year 2010-11. GDP growth for 2009-10 was placed at 8 percent. When compared to countries across the world, India stands out as one of the best performing economies. Although there was a clear moderation in growth from 9 percent levels to 7 percent soon after the crisis hit, in 2010-11, at 8.6 percent, GDP growth in nearing the precrisis levels and this pace makes India the fastest growing major economy after China. The downturns started in USA in September, 2008 have some negative impact on Indian economy. Despite having low exposure of toxic assets involved in the sub-prime crisis and a gradualist approach towards liberalisation of the financial sector, certain parts of financial sector were significantly affected like outflow of Foreign Institutional Investments (FII) from equity market that also led to rupee depreciation. It had adversely impacted country exports and software business. To fight with this crisis the government has also responded with some of monetary and fiscal stimulus. The present paper is an attempt to analyze the impact of recent global financial crisis on Indian economy and challenges that our economy faced and opportunities arisen from this financial global crisis.