Effects of Gobal Economic Recession on Indian Economy

The current global economic crisis has affected almost every country. The might of the mighty economies around the globe is enormously perturbed by the economic crisis around the world. They are facing acute catastrophe of liquidity and credit. The prime explanation being, global economy does not function in isolation. All economies are webbed with each other. Oscillation in the trade balance and economic conditions send tremors throughout the economic web.

Is India in Recession

Starting from economists to industrialists and also general mass on the streets must have been horror-struck by the very thought of recession in India. It’s recession in India. The Indian economy is not insulated from the global economic crisis that is looming over. Documentations show that the industrial growth has attained a mere 1.3% hike as compared to the same period in 2007. 1.3% is the lowest IIP (Index of Industrial Production) that has ever been registered in last ten years. This is a major issue of concern for the policy generators and industries.

Effects of recession in India

Several sectors of Indian economy are likely to face severe jolts as an effect of the global economic recession. The front runner among them is the real estate industry. A significant descend in demand has caused a stiff fall in property prices, nearly 15-20%. There may be an additional decline of another 20% in the coming Six months. The hues and cries of the real estate sector have infected the construction industry as well. The financial service sector is possible to be a victim of the global recession too. The GDP is going to suffer big time as this three sectors account for almost one third of the service GDP. The sudden slow down of industrial growth is expected to deliver a severe blow to the transport industry in turn.

The Indian IT companies are dependent on the banks and financial institutes for nearly half of their revenues. The slowed down economic activities due to current global economic crisis has restricted the financial institutes and banks to offer revenues to this sector which forced the IT industry to face a severe crisis.

The Indian Rupee is gradually gaining strength against Dollar. The consequence of this is emerging worries for the exporters though the long term prospect for the Indian exporters is stable.

The ripples of crumbling global market can be seen world wide. Its effect can be felt in the Indian economy too. Though the watchful approaches for economic reforms have saved her from a possible disaster of greater magnitude, but Indian economy is stiffly down trodden, beyond doubts. Good news is that the Indian financial infrastructure is less exposed to foreign assets and their derived products than other countries. The factors determining economic growth is more of local in nature. No sector has a dominant share on earning growth. The growth aspect of the Indian economy is moved forward by strong growth in domestic consumption and noteworthy spending on building infrastructure. The overall impact is, more of a sterilized effect on the Indian economy than the other countries has witnessed due to the current global economic recession.
The much criticized slow paced economic growth of India has proved to be a boon in disguise.