Global turbulence: India's preparednes

An Indian Economy is surrounded by number of factors such as internal and external factors. Some of them are unpredictable or uncontrollable while others are controllable by any organization or economy. The unpredictable and swift changes in an organization's external or internal environment or in an economy are that affect its performance is known as Global Turbulence. Late 20th Century was global turbulent environment for global economy and Indian economy as well due to rapid growth in technology. Year 2008 was one of the special turbulent periods for Indian economy. In this paper, we had discussed about how year 2008 became global turbulent year for India and what strategies it adopted to prepare. However, as the financial crisis morphed in to a full-blown global economic downturn, India could not escape the second round effects. The global crisis has affected India through three distinct channels: financial markets, trade flows, and exchange rates. The reversal in capital inflows, which created a credit crunch in domestic markets along with a severe deterioration in export demand, contributed to the decline of gross domestic product (GDP) by more than 2 percentage points in the fiscal year 2008–2009. Methodology used is descriptive research study. The data is collected through secondary sources such as conference papers, discussion paper, RBI reports etc. The study revealed that Indian economy had minor impact of Sub-prime crisis originated in US 2008 which became global financial crisis. The reason behind this is efforts taken by governments and central banks all over the world, the Government and the Reserve Bank of India took aggressive countercyclical measures, sharply relaxing monetary policy and introducing a fiscal stimulus to boost domestic demand. However, this paper argues that with very limited fiscal maneuverability and the limited traction of monetary policy, policy measures to restore the Indian gross domestic product growth back to its potential rate of 8–9%.