Global Crisis

Abstract

The global economic crisis precipitated by the US financial collapse has spread to India first in the financial markets and has now started impacting the real economy. India was hit by the global crisis at a time when the economy was already slowing down and the crisis has brought the growth sharply down in the second half of 2008–09 and is forecast to bring it further down in 2009–10. The number of policy measures taken so far to combat the crisis will at best soften the blow but will not lead to a revival of the economy to a higher level of growth. The crisis has shattered business and consumer confidence, raised uncertainty and brought down investment and consumption demand. In this context, fiscal and monetary policies have a limited impact in stimulating the economy. Kick-starting the long-pending structural and regulatory reforms can help a strong economic recovery.