The financial crisis that originated in US spread its tremors in different parts of the world. Culminating into a global economic crisis, its effect could be seen not just in nearby countries but far off places and Indian economy was not an exception to it as it is much more integrated with the world economy through current and capital accounts. Though being insulated by strong financial system, the slowdown in the economy was observed in low GDP, less FDI, withdrawal of FIIs, and the adverse effect on the export of software and IT services. The stimulus package introduced by the government for stimulating the demand of the economy was not that sufficient so as to fight the crisis. Depending more on the monetary policy by injecting liquidity in the market rather than focusing on effective fiscal policy, the government needs an orientation to bring a revival of the Indian economy. The need is to improve the livelihood of the people and bring about a growth in all the sectors of the economy. The present paper is an attempt to analyze the impact of the global recession on the Indian economy and to what extent it has been adversely affected by it. The paper is divided into three sections. The first section is an introductory section which discusses the genesis of the global financial meltdown, its features and effects on the US financial system. The second section deals with the impact of the crisis on the Indian economy, and the slowdown in the economy. The third section deals with how far the Indian economy has been insulated to avoid the adverse effect of the crisis and the measures that the government need to undertake so as to bring a revival of the economy.
