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Effect on World Economy

The global Financial Crisis has affected almost all the countries in the world developed countries as well as third world. The global leadership position was reached back to 1929-30 where great depression has taken place in US. It affected US that much where an author says "How symbolic that Chinese astronaut takes a spacewalk while the US Treasury Secretary is on his knees."

In Europe, some countries are trying to nationalize their Financial Institutions as well as their banks in an attempt to provide some assurance for people. This may include guaranteeing 100% of people's savings or helping broker deals between large banks to ensure there isn't a failure.

The Financial Crises and the Developing World

For third world the financial crisis has lead too increase of food prices, high fuel costs, soaring commodity prices. Some of the analysts fear that this may lead global recession. United Nations Conference on Trade and Development report, say that these crises are going to affect countries badly which are dependent on other countries for import or export. UN conference on Trade and Development said that uncertainty and instability in international financial, currency and commodity markets projects a gloomy picture for third world. Besides, this third world may be forced to repay to their international debt on account of this financial crisis which may create problems in those countries.

Impact on Indian Economy

India is not completely insulated against financial crisis. To some extent it is protected but still there is blow on our economy due to this crisis. The reasons why it was protected to some extent can be mentioned as below:

Even some strength is there but still these strengths won't act like a complete protection shield. The impact on Indian Economy may be on:

Indian Financial Markets It is quite clear Indian growth rate was achieved by foreign investment in equity market. Due to financial crisis the foreign investors has withdrawn their monies to support their parent companies. Due to this Indian Rupee has depreciated and has touched all time high.

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* Contributed by: -
Prof. T. Srinivasa Rao has done M.Com, M.Phil. ICWAI (F)& EMBA. Also has Diploma in Export Management. He is currently working as Lecturer in Commerce at Andhra Loyola College Vijayawada, Andhra Pradesh.