A COMPREHENSIVE PROJECT REPORT ON IMPACT OF GLOBAL FINANCIAL CRISIS ON DEVELOPING ECONOMIES AT BALAJI SECURITIES & FINANCIAL SERVICES, VAPI

Submitted to LAXMI INSTITUTE OF MANAGEMENT, SARIGAM IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In Gujarat Technological University UNDER THE GUIDANCE OF DR. KEYUR NAYAK ASST. PROFESSOR MR. JAY KUMAR EXTERNAL GUIDE

Submitted by MR. KRUNAL.B.SHAH [Batch: 2010-12, Enrollment No.: 1073105920]

MBA SEMESTER III/IV MR. KEVAL.S.BHANDARI [Batch: 2010-12, Enrollment No.: 107310592045] MBA SEMESTER III/IV LAXMI INSTITUTE OF MANAGEMENT, SARIGAM MBA PROGRAMME Affiliated to Gujarat Technological University Ahmedabad

COLLEGE CODE: 731

BRANCH CODE: 92

DECLARATION

We, Keval S. Bhandari and Krunal B. Shah, students of MBA (2nd year, finance) 2011-2012 studying at Laxmi institute of management, Sarigam declare that the project work on Impact Of Global Financial Crisis On Developing Economies is the partial fulfillment of MBA programme under the Laxmi institute of management, Sarigam. This project was undertaken under as a part of curriculum according to the GTU rules and norms and it has not commercial interest and motive. It is our original work. It is not submitted to any other organization for any other purpose.

Keval S. Bhandari. Krunal B. Shah

Laxmi Vidyapeeth`s Laxmi Institute of Management, Sarigam (LIMS)

P.B No. 15, Sarigam P.O Valsad- 396 155, Gujarat 0260-2786661/2/3. Fax: 2786665 info@laxmividyapeeth.com; www.laxmividyapeeth.com; www.lims.org.in

Certificate

This is to certify that the contents of this comprehensive project report entitled IMPACT OF GLOBAL FINANCIAL CRISIS ON DEVELOPING ECONOMIES by Keval S. Bhandari and Krunal B. Shah, submitted to Gujarat Technological University, Ahmadabad for the Award of Master of Business Administration is original research work carried out by her under my supervision. On the basis of the declaration made by her. I recommend this project report for the evaluation.

This report has not been submitted either partly or fully to any other University or Institute for award of any degree or diploma.

Signature of the Project Guide

(Dr. Keyur Nayak)

This project is forwarded for evaluation

(Director) Stamp & Signature

ACKNOWLEDGEMENT

It gives us immense pleasure to present this project report on Impact Of Global Financial Crisis On Developing Economies. In partial fulfillment of post-graduate course Master of Business Administration. No work can be carried out without the help and guidance of various persons. We are happy to take this opportunity to express our gratitude to those who have been helpful to me in completing this project report. At the outset we would like to thank Dr. Keyur Nayak (Asst. Professor) for his valuable advice and guidance during our project completion for timely help concerning various aspects of project. We also thank to all staff members for the help to complete the grand project. We would be falling in our duty if we do not express our deep sense of gratitude to Dr. Rupak SIR (PRINCIPLE) without his guidance it wouldnt have been possible for us to complete this project work. Lastly we would like to thank my parents, friends and well wishers who encouraged us to do this research work and all those who contributed directly or indirectly in completing this project to whom we are obligated to.

Keval S. Bhandari Krunal B. Shah MBA (2ND YEAR)

EXCUTIVE SUMMARY

The global financial crisis has hit emerging and developing economies extremely hard. Output, exports, remittance flows, aid and capital inflows have all been lower than expected.

For some people in the poorest economies this has been disastrous. Lower employment rates and a lack of social safety nets mean that poverty is higher than it would otherwise have been.

Around 120 million more people may now be living on less than US$2 a day, and 89 million more on less than US$1.25 a day.

It is impossible to measure exactly the effects of the financial crisis because we can never know for certain what would have happened if it had not occurred. But reasonable estimates of its effects can be derived by looking back to the second half of 2007 and comparing forecasts made then for 2008, 2009 and 2010 with actual developments over the last three years.

On this basis, it is clear that the financial crisis has knocked emerging and developing economies onto a lower trajectory for output, exports and remittances. Nominal GDP for this group of countries will be around US$1.3 trillion lower in 2010 than was expected in 2007, and the cumulated loss over the three years 2008 to 2010 will amount to US$2.6 trillion. Lost remittances over the same period will amount to more than US$100 billion.

Private portfolio flows to emerging and developing countries fell sharply as the financial crisis deepened, but they were clearly at an unsustainable level in the lead-up to the crisis. Direct investment flows have held up much better.

Aid flows to low-income countries will be lower than hoped. The money value of aid targets has been reduced and some countries will choose to fall short of their targets because of pressures on their public finances. African countries will see only U$11 billion of the US$25

billion in increased aid promised for 2010 at the Gleneagles G8 and Millennium +5 meetings in 2005.

Although the worst of the crisis appears to be in the past, its effect on emerging and developing economies will be sustained well into the future. Poverty will be higher than it would otherwise have been and achieving the Millennium Development Goal of halving poverty by 2015 will be that much harder.

The Overseas Development Institute has coordinated a 10-country study on the effects of the global financial crisis and country level policy responses in Bangladesh, Benin, Bolivia, Cambodia, Ghana, Indonesia, Kenya, Nigeria, Uganda and Zambia. These countries exhibit different levels of openness, aid and remittance dependency, financial integration, economic and trade structures, and institutions and so it is likely that they will be affected differently.

Conducted by 40 developed and developing country researchers, this research has examined the main transmission belts (trade, private capital flows, remittances, aid) through which the crisis affects developing countries. It has also examined the growth and development effects and the policy responses so far. While it is still too early to assess the full effects, and there is consensus amongst the country case studies that 2009 will see worse effects than 2008, we find that different countries are affected differently. The slowdown in growth comes after a period of strong growth for developing countries and puts development success stories in danger.

CHAP NO:
1
1.1 1.2 1.3

CONTENTS
INTRODUCTION OF TOPIC
THEORITICAL CONCEPT OF GLOBAL FINANCIAL CRISIS RECESSION IMPACT OF THE CURRENT FINANCIAL CRISIS ON DEVELOPING COUNTRIES

PAGE NO
1 4 8 24 24 30 31 33 34

1.4 1.5 1.6 1.7 1.8 1.9

COMPANY HISTORY & BACKGROUND VISION, MISSION & QUALITY PRODUCTS AND SERVICES COMPANY PROFILE STRUCTURE OF THE FIRM MISSION AND VISION OF THE FIRM

2
2.1

REVIEW OF LITERATURE
REVIEW OF LITERATURE

35

3
3.1 3.2 3.3 3.4 3.5 3.6 3.7

RESEARCH METHODOLOGY
NEED OF THE STUDY RESEARCH PROBLEM DESIGN OF THE STUDY Objective of the study RESEARCH PLAN DATA SOURCES Scope of the study

41 42 42 43 43 43 43

DATA ANALYSIS FINDINGS CONCLUSION REFERENCE BIBLIOGRAPHY

44 75 79 80

LIST OF TABLES

TABLE NO.
1 2 3

TABLES

PAGE NO.
46 48 50 52 53 55 58 60

TRENDS IN GDP AT FACTOR COST IN RS. CRORE INDEX OF INDUSTRIAL PRODUCTION (GROWTH ) NET INVESTMENT OF FIIS AT MONTHLY EXCHANGE RATE (IN US $ MILLION) MOVEMENTS OF BSE SENSEX FOREIGN EXCHANGE RATE INDIAS FOREIGN TRADE IN US $ MILLION IMPACT ON OUTPUT OF DIFFERENT COUNTRIES IMPACT ON EXPORT GROWTH OF DIFFERENT COUNTRIES

4 5 6 7 8.

LIST OF CHART

TABLE NO.
1 2 3

TABLES

PAGE NO.
47 48 51 52 54 56 58 60 62 64 66 67 69 71 73

TRENDS IN GDP AT FACTOR COST IN RS. CRORE INDEX OF INDUSTRIAL PRODUCTION (GROWTH ) NET INVESTMENT OF FIIS AT MONTHLY EXCHANGE RATE (IN US $ MILLION) MOVEMENTS OF BSE SENSEX FOREIGN EXCHANGE RATE INDIAS FOREIGN TRADE IN US $ MILLION IMPACT ON OUTPUT OF DIFFERENT COUNTRIES IMPACT ON EXPORT GROWTH OF DIFFERENT COUNTRIES FOREIGN EXCHANGE RESERVES RUPEES PER US $ DAILY MOVEMENTS IN THE SENSEX NET FOREIGN INVESTMENTS CUMULATIVE FII INVESTMENT IN EQUITY ($ BN) FIIS AND THE STOCK MARKET FOREIGN INVESTMENT AND CHANGE IN FOREX RESERVES

4 5 6 7 8 9 10 11 12 13 14 15