Economic analysis and Financial crisis analysis (2007-08 to 2011-12)

Contents
Economic Crisis Financial Crisis Global Financial Crisis Financial Crisis in India Economic Analysis Indian Economy :2012-13

Economic Crisis
A situation in which the economy of a country experiences a sudden downturn brought on by a financial crisis. An economy facing an economic crisis will most likely experience a falling GDP, a drying up of liquidity and rising/falling prices due to inflation/deflation. An economic crisis can take the form of a recession or a depression.

Financial Crisis
A situation in which the supply of money is outpaced by the demand for money. This means that liquidity is quickly evaporated because available money is withdrawn from banks, forcing banks either to sell other investments to make up for the shortfall or to collapse.

Financial Crisis
In broader sense , Financial crisis includes Bank Run Stock Market Crash Financial bubble Burst Sovereign Debt Default

20082012 global financial crisis

The 20082012 global financial crisis, also known as the Global Financial Crisis (GFC), late-2000s financial crisis or the second "Great Recession", is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s.

It resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world.

Reasons of 20082012 global financial crisis

Subprime or Housing bubble burst in USA European sovereign-debt crisis

Factors causing Subprime problem in USA

Subprime Lending Lower Interest Rates Huge capital inflow Deregulation

Impact on India as Financial crisis

Information Technology Exchange rate Foreign Exchange outflow

Capital inflow

Real Estate Stock Market Export

Increase in unemployment

Impact in 2009-10

700,000 jobs were eliminated in textile industry in 2009. 200,000 people lost their in jem industry.

INDIA: 2010-11
Domestic problems have weakened the fundamentals. There is no spark in the economy now. Fiscal deficit : 4.6% 0f GDP Inflation is not under control. Export cloud slump much harder than in 2008. Current account deficit : 2.7% of GDP

Economic Analysis
Growth rate:
Inflation: Fiscal deficit: 4.6% Current a/c deficit: 2006-07 9.3% 6.2% 2.7% 2010-11 7.2% 9.4%

1.3%

2.7%

2006-07

20108%

11 Repo rate :

9%

Pay commission award: Accepted Farm debt waiver: Rs.75000cr

Reasons for financial crisis 2011

Global Factors European crisis Continuing US problems Crude oil prices Japan nuclear reactor & earthquake

Domestic Factors Inflation Scams Political allies Pending Bills

INDIAN ECONOMY:2012-13

Indias GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.

2013-14: Projected at 8.6%

Inflation: 9.47% in March 2012 Inflation in 2012-13 : 6.7%

Sectoral shares in GDP: Agriculture : 17% Industry: 28.2% Services: 54.9%

Subsidies - 2% 0f GDP Disinvestment- 30,000cr

Tax Free Bond for Infrastructure in 2012-13 : Rs60,000cr Fiscal Deficit : 5.1% 0f GDP