CURRENT ECONOMIC CRISIS AND ITS IMPACT ON INDIA Abreviations used : US UNITED STATES OF AMERICA EU- EUROPEAN UNION

N S&P- STANDARDS AND POORS ( global rating agency) FIIs- FOREIGN INSTITUTIONAL INVESTORS Nowadays we come across terms like recession , subprime crisis and European debt crisis on a daily basis. And now the Big Boy US, whose debt has been downgraded by S&P. The reasons for all the above problems are obvious. High retirement benefits, inadequate jobs to match a very high standard of living and add to it ageing population. This has led to a serious debt crisis in these nations which in some cases has led to countries being unable to pay interest costs leave alone the debt. Being in a Globalisation oriented world, India hasnt remained insulated completely from this debt crisis. Indian export market is bound to get impacted as its 2 major export destinations US and EU are showing sluggish demand. This has impacted textile and IT industry immensely. Secondly, due to debt crisis FIIs have started to suck out cash from emerging economies like India in order to pay back debt at their home nations, This has resulted in stock markets falling from a peak of 20000 to sub 17000 levels as on August 5. On the other hand, due to gloomy global growth outlook, essential commodities like oil and metals have corrected sharply (oil is down from a peak of 110$per barrel to 80 $ per barrel). This would help India in controlling inflation as 80% of oil is being imported. Therefore, impact of debt crisis would be felt in India but it wouldn,t be as high as it is being perceived.