Global Financial Crises and Its Effect on India

There were arguments and counter arguments with regard to the impact on Indian economy of the global financial meltdown. The paper examines the economic scenario in India. The belief that Indian economy was adequately insulated from such global development has been found to be only partially correct. The crises affected the economy via dwindling foreign exchange reserves as significant amount of it had to be withdrawn from equity market by the foreign institutional investors. The phenomenon resulted in the adverse effect on various key macro variables which include balance of payments and employment. India’s slow pace of lessening further controls, albeit because of political compulsions, came in handy for the economy.