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rent global meltdown to the exuberance of the developed economies which was largely credit based without the requisite regulation to control the current spin-off.

The world situation as afar as this global financial crisis is concerned is very fluid. Changed take place at enormous speed thus making definite statements and projections very difficult. The instances cited above point to the fact that most developed countries have been affected and are being affected by the global crisis.

2.2 Impact of Global Financial Crisis on India

The contagion of the crisis has spread to India through three major channels - the financial channel, the real channel, and importantly, as happens in all financial crises, the confidence channel.

India's financial markets - equity markets, money markets, forex markets and credit markets - had all come under pressure from a number of directions. First, as a consequence of the global liquidity squeeze, Indian banks and corporates found their overseas financing drying up, forcing corporates to shift their credit demand to the domestic banking sector. Also, in their frantic search for substitute financing, corporates withdrew their investments from domestic money market mutual funds putting redemption pressure on the mutual funds and down the line on non-banking financial companies (NBFCs) where the MFs had invested a significant portion of their funds. This substitution of overseas financing by domestic financing brought both money markets and credit markets under pressure. Second, the forex market came under pressure because of reversal of capital flows as part of the global deleveraging process. Simultaneously, corporates were converting the funds raised locally into foreign currency to meet their external obligations. Both these factors put downward pressure on the rupee. Third, the Reserve Bank's intervention in the forex market to manage the volatility in the rupee further added to liquidity tightening. Rupee-US$ rate moved up from 40.25 during 2007-08 to 45.92 during 2008-09 and 48.65 during April 01-July 21, 2009 (Misra, 2009).

So far the real sector is concerned, the transmission of the global cues to the domestic economy has been quite straight forward - through the slump in demand for exports. The United States, European Union and the Middle East, which account for three quarters of India's goods and services trade are in a synchronized down turn. Exports from India started experiencing negative growth from October 2008, a trend which has continued till May 2009, latest month for which data is available. During 2008-09, exports from India rose by 3.6 per cent in US$ terms compared to 28.9 per cent growth in the previous year. Service export growth is also likely to slow in the near term as the recession deepens and financial services firms - traditionally large users of outsourcing services - are restructured. Net capital inflows, which increased sharply to 9.2 per cent of GDP (US$ 108 bn) in 2007-08 from 1.9 per cent of GDP in 2000-01, witnessed a sharp decline to 0.8 per cent of GDP (US$ 9.2 bn) during 2008-09. FDI and NRI deposits witnessed a surge over their previous year's level. Portfolio investment declined to outflow of US$ 15.0 billion in 2008-09 from net i本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。