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Indian economy and how it has managed the global crisis

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  1. Abstract
  2. Introduction
  3. Meaning of recession
  4. Causes of economic recession
  5. History of economic recession
  6. Impact of global recession on Indian economy
    1. Textile industry
    2. Steel industry
    3. Cement industry
    4. FMCG companies
    5. Realty sector
    6. Banking and mutual funds sector
  7. Conclusion
  8. References

?Money which is the source of unlimited benefits, becomes the cause of calamity and unhappiness if not controlled? - Robert Shan

The above quotation by Robert Shan exactly describes the reason of current global financial crisis. The current global financial crises are the cause of defaults on sub-prime mortgages in US. Sub-prime is a high risk debt offered to people with poor credit worthiness or unstable incomes. Major Banks is US have landed in trouble after people could not repay the loans. Many banks have turned to be defaulter. After the case of Lehman Brothers, Merrill Lynch and other American banks, the banks of other countries are also facing the default risk.

Because of the sub-prime mortgage, the housing market soared. The realty sector boomed but could not sustain for long, and it collapsed because of the loan defaults. This situation spreaded like wild fire and put the US economy in danger. This coupled with rising oil prices and slowed down the growth of the economy.

[...] In crores) Quarter-II In crores) Quarter-II Performance of Textile Sector Name of the company % change Quarter-I % change Quarter-II Raymond (Source: Confederation of Indian Textile Industry- CIIT) 2. Steel Industry: There is a major impact of Global financial crisis on Steel industry also fall in the prices of steel products has been recorded in the last month. And in comparison with June-2008, the prices have fallen by as the prices of its raw material i.e. iron and coal have fallen by 61% and 33% respectively. [...]

[...] Position of Sales, Consumption and Net Profit of Major Steel Companies in October-2008 [Figures in percentage] Name of the Sales Consumption of Raw Net Profit company material [Source: ET Bureau] From the above table, it can be seen that ISPAT and JSL shows net loss where as TATA steel and JSW Industries having moderate performance. The overall performance of the steel industry remained hopeless Cement Industry: Cement industry shows 15% rise in sales but its net profit has declined by 25%. [...]

[...] Number of New projects and Discontinued Projects During the period of September- '05 to September- Position of investments in New Projects and Discontinued Projects during September-'05 to September-? Banking Sector: Banking sector also proves the impact of Global financial crisis on Indian Economy. During July to September Indian banks have shown increase in weak solvency Margin and Bad Loans. According to the survey of ASSOCHEM Eco plus none performing assets of 25 Indian banks, have risen by 24% during this period. [...]

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