TWN Global Economy Series no. 19 The Costs of “Coupling”: The Global Crisis and the Indian Economy By CP CHANDRASEKHAR Publisher: TWN (ISBN: 978-967-5412-08-0) Year: 2009   No. of pages: 32

ABOUT THE BOOK

In the early stages of the current global economic crisis, it was suggested that the Indian economy (along with China), with a robust growth pattern which diverged from that of the developed countries, would be spared the raging market turmoil. Subsequent developments, however, have cast serious doubt on this "decoupling" thesis.

This paper contends that the pre-crisis boom in India was in fact fundamentally dependent on greater integration into the world economy - an integration which also rendered the growth process uneven and vulnerable to crisis. The paper examines three channels through which this integration has come to influence the impact of the present crisis on India:

*          a slowdown in exports of goods and services

*          outflows of foreign capital

*          a contraction in credit-financed domestic demand.

Assessing the Indian government's response to these adverse effects of the crisis, the paper finds it to be inadequate on both the fiscal and monetary policy fronts. On top of this, the government appears intent on continuing further down the very path of financial integration and deregulation which could lead to increased economic instability.

CP CHANDRASEKHAR is a Professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University in New Delhi.

Contents

1.      INTRODUCTION                                                                 

2.      THE EXPORT SLOWDOWN                                                    

3.      CAPITAL INFLOWS AND THE FINANCIAL SECTOR

4.      THE CRISIS AND CREDIT-FINANCED DEMAND

5.      THE INDIAN GOVERNMENTS RESPONSE

        

REFERENCES

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