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 we recover from the financial crisis of 2008?
Congress passed the Struggling Asset Relief Scheme (TARP) to empower the US Treasury to implement a major rescue program for troubled banks. The goal was to avoid a national and global economic meltdown. To end the recession, ARRA and the Economic Stimulus Plan were passed in 2009.
Has China ever experienced a downturn?
BEIJING (Xinhua) The coronavirus pandemic has brought China’s spectacular, nearly half-century-long streak of growth to a stop, highlighting the monumental task that world leaders face in reviving the global economy.
Chinese officials announced on Friday that the world’s second-largest economy shrank 6.8% in the first three months of this year compared to the same period last year, putting an end to a run of unbroken growth that lasted through the Tiananmen Square crackdown, the SARS epidemic, and even the global financial crisis. The figures reflect China’s aggressive attempts to eradicate the coronavirus, which included closing most industries and offices in January and February as the outbreak afflicted tens of thousands of people.
The harsh figures demonstrate how difficult it will be to get the global economy back on its feet. China has become possibly the world’s single most vital economic engine, lifting fortunes at prior times of distress, such as the financial crisis, since emerging from abysmal poverty and isolation more than 40 years ago.
Now, China is attempting to relaunch its $14 trillion economy, a move that might provide a much-needed boost to the rest of the world. The spread of the coronavirus to the United States and Europe, which paralyzed their economies, has prompted predictions that global output will contract considerably more this year than it did even during the financial crisis.
Who profited from the financial crisis of 2008?
Warren Buffett declared in an op-ed piece in the New York Times in October 2008 that he was buying American stocks during the equity downturn brought on by the credit crisis. “Be scared when others are greedy, and greedy when others are fearful,” he says, explaining why he buys when there is blood on the streets.
During the credit crisis, Mr. Buffett was particularly adept. His purchases included $5 billion in perpetual preferred shares in Goldman Sachs (NYSE:GS), which earned him a 10% interest rate and contained warrants to buy more Goldman shares. Goldman also had the option of repurchasing the securities at a 10% premium, which it recently revealed. He did the same with General Electric (NYSE:GE), purchasing $3 billion in perpetual preferred stock with a 10% interest rate and a three-year redemption option at a 10% premium. He also bought billions of dollars in convertible preferred stock in Swiss Re and Dow Chemical (NYSE:DOW), which all needed financing to get through the credit crisis. As a result, he has amassed billions of dollars while guiding these and other American businesses through a challenging moment. (Learn how he moved from selling soft drinks to acquiring businesses and amassing billions of dollars.) Warren Buffett: The Road to Riches is a good place to start.)
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.
Is India’s economy in trouble?
The ongoing Covid-19 outbreak has taken a toll on India’s economy. The crisis has given way to recovery, and India was not the only one who had to deal with it.
One feature, however, distinguishes India from most emerging and advanced economies: the fact that the country was already in a deep economic recession prior to the pandemic. Much has been said about the slowdown and how it coincided with the implementation of demonetisation and the GST. We divided the last two decades and a few years into four-year chunks to see how incomes, consumption, investments, and tax collection have changed over time.
How many financial crises has India experienced?
A recession is defined as a drop in general economic activity that lasts for two quarters (six months) and is followed by a drop in income, sales, and employment. Four years of negative GDP growth have been recorded in India’s independent history. -1.2 percent (FY58), -3.66 percent (FY66), -0.32 percent (FY73), and -5.2 percent (FY73) respectively (FY80). The current recession is distinct from prior recessions in that it presents a new set of issues.
Is India experiencing a recession?
The latest GDP statistics from the National Statistical Office for the fiscal year 2020-21 confirms what was expected. However, it appears that the country’s economy is already in a severe state of paralysis for the current fiscal year.
The cause for this is a lack of demand and consumption in rural areas, which support two-thirds of the country’s population. This is despite the fact that agriculture was the only industry to develop in 2020-21, with a gross value added of Rs. 20.40 lakh billion. This year’s monsoon is also expected to be above average.
India’s GDP shrank by Rs. 10.56 lakh crore, or 7.3 percent, between 2019-20 and 2020-21. The statistics on consumption, on the other hand, confirms what was widely expected: the economic slowdown resulted in a massive drop in private consumption. There would be no economy without it.
Private consumer expenditure, which accounts for 56% of the country’s GDP in 2020-21, has decreased from Rs 83,21,701 crore (57.1%) in 2019-20 to Rs 75,60,985 crore (56% of GDP) in 2020-21.
This equates to 70% of the overall GDP loss. This highlights the importance of private spending to economic growth.
Prior to this, the country had already seen its fourth consecutive year of economic downturn. Private consumption, both in rural and urban areas, was not growing at a rate fast enough to propel economic growth beyond 5%.
Private consumer expenditure per capita declined to Rs 55,783 in 2020-21, down from Rs 62,056 in 2019-20. Consumption expenditure is a proxy for income and is used to determine poverty levels in India. Using the following consumer expenditure as a rough estimate, the country’s monthly per capita income in the first year of the epidemic was Rs 4,649 per month. This was around 10% less than the previous year’s expenditure.
In the first year of the pandemic, it predicts a drop in overall economic activity. However, there is a caveat: even this expense was spent when a large proportion of people reported a loss of income or were working in irregular jobs. It implies that the majority of them have depleted their funds.
To summarize the accounting, people have either been left with no money or are simply returning to work, since the GDP numbers for the last quarter of the fiscal year showed a small but positive increase.
This reduction has had a disproportionate impact on India. Using World Bank data, the Pew Research Center estimates that the number of impoverished people in India (those earning $2 per day or less at purchasing power parity) has more than doubled in a year, from 60 million to 134 million, due to the pandemic-induced recession.
From here, India enters a situation that appears to be unimaginably precarious at the moment. The information arrived at a time when we thought the pandemic was virtually gone. In April, at the start of the new fiscal year, India was hit by a devastating second wave.
The second wave is also making its way into rural regions, causing widespread restrictions and lockdowns. Given India’s rural population of half a billion people, this could be the world’s first rural pandemic.
Between May 1 and 24, India registered over 7.8 million new cases, the highest monthly total ever. During this time, India was responsible for every second new case of COVID-19 in the world. And India was responsible for one out of every three deaths caused by this disease. For this time period in India, every second new case was reported from rural regions, and every second death was likewise from rural areas. It indicates that every third case in the world originated in India’s rural areas.
The rural areas were not as badly affected in the initial wave; rather, there was a widespread belief that COVID-19 was a disease of metropolitan areas. While we’ve seen overburdened health infrastructure crumble in cities and megacities, the prospect of what could happen in rural places is terrifying.
It appears that it will be far worse than previous year. India’s recovery from the pandemic is challenging and unpredictable due to the infection’s rural spread.
The second wave, which is more rural in nature, proves to be more disastrous for the country’s already destitute people. For the country’s approximately half-a-billion rural population, experts predict a vicious cycle. Rural Indians, who make up the majority of the informal sector and are poor by any standard, have been working irregular jobs for more than a year as the pandemic has ravaged the country.
The second wave, which likely include more rural cases, will exacerbate the economic crisis. As the number of instances rises, health-care costs may grow as well, depleting people’s income and savings. At the moment, all of the country’s states have put limitations on movement and activities. Unlike last year, the severity of lockdown varies from state to state and, within a state, from district to district.
Similarly, easing limits will be a state-by-state decision. People who have been without a regular source of income for more than a year are in a state of significant economic instability. This contributes to the perpetuation of the poverty cycle. All indications point to this.
Unlike previous year, job losses and unemployment are being recorded from rural areas, according to the Centre for Monitoring Indian Economy (CMIE). According to CMIE’s most recent data, the national unemployment rate is approaching its all-time high of June 2020, owing to COVID-19’s national lockdowns and restrictions. For the week of May 16, urban unemployment was 14.71 percent, while rural unemployment was 14.34 percent.
In its monthly bulletin for May, the Reserve Bank of India stated, “The epidemic has lowered the labor participation rate to 39.9% from an average of 42.7 percent in 2019-20.”
This degree of unemployment is referred to as the tipping point, especially in rural areas. “By 2017-18, the jobless rate had risen to its highest level in 45 years. According to economist Santosh Mehrotra, the COVID-19 pandemic has exacerbated the problem.
According to various estimations, the unorganized sector has been struck the hardest by the second wave. “Unlike the first wave, rural supply chains will be harmed,” Mehrotra continues, “since farmers and cultivators are also afflicted.”
The economic effects of a prolonged epidemic in rural areas would be severe because the labor is primarily informal and low-wage. India’s rural income, on the other hand, accounts for over 46% of the country’s total revenue.
Last year, the rural economy was buoyed by strong agricultural growth, while government investment on rural programs remained stable, albeit with reductions. However, it has remained unchanged this year. As millions of people returned to their communities, the agriculture industry reported a 3% gain in employment.
This year, it is unable to accommodate any further visitors. Furthermore, despite large harvests, the unfavorable trade term results in decreasing income. The much-inflated benefit of a third consecutive normal monsoon will be nullified as a result. When you have less money, you have less money to spend.
Similarly, rural areas account for 50% of manufacturing and construction in India, making them a big employment. These, too, are subject to lockdowns, and operations have slowed as a result of a general lack of demand. Rural communities will experience a drop in income as well.