India’s economy has profited from recent rapid economic growth, which has since slowed significantly as a result of the global economic crisis. India’s economy grew by 6.7 percent in the fiscal year 2008-09. India was less affected by the global crisis because exports account for only 15% of its GDP, less than half that of big Asian economic powers such as China and Japan. However, unlike other major Asian economies, India’s government finances were in bad health, and it was unable to implement large-scale economic stimulus measures as a result. Despite this, India’s industrial production increased by 7.1 percent from June 2008 to June 2009.
Former Indian Finance Minister P. Chidambaram once claimed that he expected India’s GDP to “bounce back” to 9% in FY2009, despite the fact that he was wrong. Manmohan Singh, India’s Prime Minister, stated that the government will take steps to ensure that the country’s economic growth returns to 9%. India’s economy is expected to recover in 4-6 quarters, according to the Asian Development Bank. India asked for a coordinated global fiscal stimulus at the G20 Summit to help alleviate the severity of the global credit crisis. India announced a US$4.5 billion injection into the financial system to assist exporters.
According to some commentators, India’s rising commerce with other Asian countries, particularly China, will assist to mitigate the crisis’ harmful effects. India’s high domestic demand and huge infrastructure projects, according to analysts, will function as a buffer, minimizing the impact of the global slump on the country’s economy. According to economists, India’s financial system remains comparatively unscathed, and its banks have little exposure to subprime mortgages. The New York Times lauded the Reserve Bank of India’s strict rules on the Indian banking system in an editorial.
India’s economy grew at a 5.8% annual rate in May 2009, above most estimates. The Indian economy increased by 7.9% in the second quarter of 2009, indicating that the Indian economy will grow at a rate of 7% or higher in 2009 and 8-9 percent in 2010. The economy recovered in the third quarter of 2010, growing at an annual pace of 8.8%.
Was India affected by the Great Recession of 2008?
Following a 9.8% GDP increase in the fourth quarter of 2006-07, the Indian economy began to slow in 2007-08 (April-March). During the five years ending in 2007-08, the Indian economy grew at an annual average rate of 8.8%.
How did India recover from its economic downturn?
The Indian economy recovered in the second part of the current fiscal year as lockdown restrictions were largely removed, economic activity resumed, and the government increased capital investment.
According to figures issued by the National Statistical Office (NSO) on February 26, India’s gross domestic product (GDP) increased by 0.4 percent year on year in the quarter ended December 2020. According to a Reuters poll of economists, this number is expected to be 0.5 percent. According to updated figures provided on Friday, the GDP contracted by 24.4 percent and 7.3 percent respectively in the quarters ending June 2020 and September 2020. This was largely due to the disruption of economic activities caused by the shutdown. Beginning March 25, India instituted a 68-day lockdown, one of the most stringent in the world.
To be sure, the Indian economy will continue to decline at its fastest pace in the current fiscal year. GDP is predicted to decrease by 8% in 2020-21, according to the second advanced projections of GDP provided along with the December quarter statistics.
The Nomura India Business Resumption Index (NIBRI) and other high frequency indicators imply that the economy has already recovered to pre-pandemic levels. In the week ending February 21, the NIBRI reached 99.3 the pre-pandemic baseline. Despite the fact that Covid-19 instances are on the rise in several places, India appears to have evaded a second wave of infections for the time being. Expediting the vaccination program, as the government appears to have done by making vaccines available to persons over 60 and those over 45 with co-morbidities, could help contain the pandemic in the coming days.
How did India manage to weather the global financial crisis?
Given that the Pakistani terrorist assaults on Mumbai, India’s financial nerve center and commercial metropolis, occurred in late November 2008, India’s performance is all the more remarkable. The attackers tarnished India’s image as a rising economic power, a globalization success story, and a draw for investors and visitors throughout the world.
Indeed, foreign investors withdrew $12 billion from India’s stock exchanges in late 2008. However, investors were encouraged to return because of India’s tenacity in the face of adversity and adult restraint in the face of violent provocation. Despite the global financial crisis, foreign direct investment reached $27.3 billion in 2008-2009, including $1 billion in only one week in May 2009.
India’s capacity to weather the economic storms was aided by the fact that it is less reliant on global commerce and capital flows than most other countries. External trade accounts for around 20% of India’s GDP (the figure for China is roughly double). The rest is accounted for by the country’s huge and dynamic internal market. The economy was buzzing as Indians continued to produce goods and services for other Indians.
Despite a 30% drop in item exports, India’s service exports remained strong during the crisis. Remittances from overseas Indians remained strong, reaching $46.4 billion in 2008-2009, with the majority coming from the predominantly blue-collar Indian expatriate community in the Gulf countries.
In addition, India’s traditionally conservative financial system had an important impact. Its banks and financial institutions were not enticed to purchase the mortgage-backed securities and credit-default swaps that bankrupted a number of Western financial institutions. Domestic capital creation, one of the main drivers of GDP, maintained much of its pace from previous years.
How did we bounce back from 2008?
1 Congress approved a $700 billion bank bailout in September 2008, which is now known as the Troubled Asset Relief Program. Obama proposed the $787 billion economic stimulus package in February 2009, which helped avert a global depression. The following is a timeline of key events during the Great Recession of 2008.
Is India’s economy in trouble?
Instead, the economy has been in free fall, with GDP growth slowing each year from 2017 to 2020, inflation soaring, and unemployment reaching a new high of 23.5 percent in April 2020.
How did the Great Recession effect India?
The global financial crisis began in December 2007. The impact on India was initially minor: GDP growth fell from 9% in 2007-08 to 7.8% in April-September 2008, still a strong rate. However, after the September crash on Wall Street, India’s GDP slowed to 5.8%, 5.8%, and 6.1 percent in the following three quarters.
When did India have a downturn?
According to the RBI’s economic data, the country has experienced four recessions, beginning in FY 1957-58 (when GDP contracted 1.2%), followed by 3.7 percent contraction in 1965-66, 0.3% decline in 1972-73, and 5.2 percent contraction in 1979-80.
Unlike the current fiscal year, when the main cause of recession is a global pandemic, prior recessions in India’s GDP were caused by two factors: a weak monsoon and an energy crisis. However, if India’s FY21 GDP drops in the September quarter, as economists predict, the contraction will be substantially larger.
In 1957-58, India experienced its first economic slowdown, with a negative GDP growth rate of 1.2 percent. The reason for this was a soaring import bill that increased by more than 50% between 1955 and 1957. Drought and hostilities with China and Pakistan triggered the recession in 1966.
Drought caused a 20% drop in food grain production in 1965-66. Foreign food help came to the rescue of India’s famished populace, with 70 lakh tonnes of food aid received in fiscal 1965, equal to 10% of local production.
Is India heading for a downturn?
With two consecutive quarters of negative growth, India experienced a recession for the first time in history in the first half of fiscal year 2020. In the first quarter of the fiscal year 2020-21, the gross domestic product (GDP) shrank by a historic 24.4 percent.