MSG Team's other articles

9846 The Importance of Infrastructure Sector

An economy consists of many sectors. However, infrastructure is known to be the backbone of any economy. Roads, railways, electricity, and banking services are the very bedrock on which the modern economy grows. Until and unless a nation has robust infrastructure, any other industry will find it difficult to grow and prosper. In this article, […]

9893 Increasing Exports through Free Trade Zones (FTZ)

Countries have long since realized the importance of furthering their interest by supporting the International Trade and Exports from in house and actively supporting the industries to become globally competitive. Besides this objective, many governments also aim to promote Foreign Direct Investment into the country and encourage Multi National Companies to set shop and manufacture […]

9504 Criticisms of Globalization: Growing Income Inequality

More Losers than Winners The previous articles in this module covered the topic of globalization in depth. Some of the points of discussion were about how globalization has succeeded in lifting millions of people out of poverty. While accepting this fact, it is also the case that globalization has created income inequality which when coupled […]

9926 Information System for Decision Support

Introduction In the current globalized business environment, decision making is becoming more and more difficult. Some of the problems faced by business are as follows: There is large volume of internal organizational data on hand thanks to the modern data-storage system. However, not all data available would be useful for decision. The flow of information […]

11972 Why Facebook must be Prevented from being used to Interfere in Elections Worldwide

How Facebook can be used to Influence and Interfere in Elections Worldwide It is a known fact that social media, while easing communications and connecting Billions of people worldwide, can also be used by political parties, unscrupulous and malevolent actors, and even businesses and corporate entities to manipulate public opinion and to influence the outcomes […]

Search with tags

  • No tags available.

Much has been written about the way in which India was one of the few countries that was relatively unscathed because of the global economic crisis. Most of these narratives focused on how India managed to weather the storm in the dark days following the collapse of Lehmann Brothers. However, it cannot be completely said that the worst is over for India as events of the last few months have indicated.

Starting with the rating agency, S&P (Standard & Poor’s) downgrading it to the runaway inflation that has plagued the country, there have been other economic indicators as well that do not bode well for the future of the economy. Given these factors, it is too early to say that India is out of the woods.

However, a noteworthy aspect of the global economic crisis has been the way in which global banks nearly collapsed and had to be bailed out by their respective governments. It is to the credit of the policymaking elite in India that they did not allow the trading of derivatives that were responsible in part for the global economic crisis.

Further, the fact that the RBI (Reserve Bank of India) and the Finance Ministry took steps to ensure that the banks are adequately capitalized as well as ensuring that they set aside a portion of their capital towards statutory requirements has meant that the Indian banking system did not suffer the fate that many countries in Europe and especially the United States were faced with in the aftermath of the crisis.

It is important to remember that the Indian government did respond with a stimulus package and has followed a rather loose monetary policy, in the build up to the crisis. This has meant that the growth that India has experienced has been partly due to the availability of easy money.

And the fact that the RBI is now following a tight monetary policy is an indication that it recognizes the severity of the problem of inflation. This is one aspect that needs to be watched over the coming months.

Apart from this, there is the aspect related to the way in which India is not overly export dependent like China and hence, if the foreign exchange reserves and the balance of payments along with the current account deficit are managed properly, there is no reason why India can breathe easy. However, the recent gyration in the value of the Rupee that has fallen steeply against the Dollar means that this aspect needs to be watched as well.

In conclusion, the experience of the Indian economy in the aftermath of the global economic crisis has been mixed and though there some notable positives there are downsides as well. It is for this reason that the recent pronouncements from the Prime Minister and the Industry Captains against policy paralysis needs to be seen in the context of the revival of the India story. What happens next is anybody’s guess but it is fair to say that the golden years of growth might be behind us.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles