9.6. Recession of 2008 and India

♤ The Recession of 2008 was caused by the Financial Crisis of 2008.

♤ In Asia, ripple effects of the financial crisis were felt through transmission of stock market turbulence and domestic credit stringency.

♤ India was protected from financial meltdown, largely because of the still large role of the nationalised banks and other controls on domestic finance.

♤ The most immediate effect of that crisis on India has been an outflow of foreign institutional investment from the equity market. Foreign institutional investors, who need to retrench assets in order to cover losses in their home countries and are seeking havens of safety in an uncertain environment, became major sellers in Indian markets.

♤ There was rupee depreciation.