Impact of Global Financial Meltdown on Indian Economy

Author:M.P. Nagwal,a Pramod Kumar*b

Abstract:
India started its economic planning in 1951-52, in order to attain a derisible growth rate. In 1966-67, Green Revolution highly impacted the food grains production that made India self-reliant. In 1991, India adopted, New Economic Policy (Liberalization, Privatization and Globalization), which brought remarkable change. The growth rate in GDP by more than nine percent was registered in 2005-08. However, due to global meltdown in 2008 and 2011, Indian economy shown negative impacts on growth rate of GDP, Industrial production and others macro-economic indicators. The overall growth rate of Indian economy was 6.5 percent against 8.4 percent achieved in previous two years. In 2012-13 Q1, growth rate was at 5.5 percent compared to 8.0 percent in 2011-12 Q1. The slowdown is attributable both to domestic as well as global factors. Crisil report warns that the economic slowdown and falling labour Intensity will force individuals to either work in forms or stay unemployed as 25 percent; fewer jobs will be created in the manufacturing and service sector between 2012-13 and 2018-19. India’s Industrial sector has suffered from the depressed demand condition in its export markets as well as from suppressed domestic demand due to slow generation of employment. As per RBI Report (2012-13), Industrial slowdown causes and remedies”, the sharp slow in industrial growth in recent years has been attributed to factors such as the global slowdown, infrastructure bottlenecks, delays in environmental clearance and land acquisition for projects, constraints on the availability of core inputs such as power, coal and iron ore, high inflation and interest rates. Some analysts expect the economy to slow down further this year 2013-14. Nomura has estimated GDP growth at 4.7% in 2013-14. As per Nomura “The domestic scenario remains weak as consumption is slowing down and investments remain lackluster,”. Economic crisis and their spread are increasing with the increase in globalisation. The origin may be different but the tremors are being felt in different parts of the world including India. This paper is an attempt to analyse the impact of global recession on Indian Economy particularly on industrial service and external sector. Currently, Indian economy is facing a challenge due to global financial meltdown. Though the global economic meltdown (or US Meltdown), has its origin in the United States, but gradually extended over a period of time and eventually brought the entire world under its grip.

Keywords:Key words: Global Meltdown, Gross Domestic Product (GDP), Indian Economy, Industrial Growth and Export.

DOI:

International Journal of Trade & Commerce (Vol: 4 Issue:2)