The economic situation in Indiawas already worsening when the recession came, with large capital outflows that had deteriorated India’s balance of payments and sharp decrease in manufactures export. The impact of the global crisis is mostly observed and noted on a macro level and there is less focus on the impact it has had on specific sections of the society. The weakest and the most susceptible groups: home based women workers, migrant workers and cultivators were the ones that were the most badly affected by the increasing inflation rate and the sharp rise in unemployment. It has also worsened the already prevalent food security problem of India (Financial crisis, 1, n.d).
Since commodities like food, metal and oil make up the most ofIndia’s imports, an abrupt cut in oil prices would decrease the public debt substantially, and the savings could be made available to support the fiscal incentives. Expenditure should be directed at developing physical and social infrastructure which will accelerate the revival process of the economy, focusing on prolonged sustainable economic growth. This would also address the problem of the huge debt to GDP ratio ofIndia(Mishra, 1, 2010).
The current global recession has hit Indialike it has hit all the other countries in the world badly by lowering the GDP growth rates and increasing the fiscal imbalances even though Indiawas not directly exposed to assets that were sub-prime in nature. The Indian economy is likely to grow rapidly after this crisis is over following its previous trend of a five-year record boom after a slow depressing phase. The global crisis chiefly impacted the trust and confidence that investors had in the economy. Although the federal government has implemented measures like the loosening of the monetary policy and the expansion of the fiscal policy, this is overturned its earlier policies of fiscal development and increasing public investments greatly. In order for India to ensure stability in its economy and reduce the inflationary pressures and the increasing capital costs that have heavily influenced its development and growth rate, the dependence on its fiscal policy needs to be reduced and eventually eliminated (Financial crisis, 1, n.d).
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