After a long spell of growth, the Indian economy is experiencing a downturn. Industrial growth is faltering, inflation remains at high levees, the current account deficit is widening, foreign exchange reserves are depleting and the rupee is depreciating, these features can related to the current international crisis. The most immediate effect of that crisis on India has been on outflow of foreign institutional investment from the equity market.
India's G.D.P. Growth estimate for the current fiscal (2008-2009) has been down graded from 8 percent to 7.4 percent and for the next Financial year (2008-2009) from 8.5 percent to 7 percent. When the Financial crisis erupted in a comprehensive manner on wall street, there was some premature triumphalism among Indian Policymakers and media persons.
[...] It could be argued that the $275 billion the RBI still has in its kitty is adequate to stall and reverse only further depreciation if needed. But given the sudden exit by the F11s, the RBI is clearly not keen to deplete its reserves too fast and risk a foreign exchange crisis. Given the importance of F11 investment is driving Indian stock markets and the fact that cumulative investments by F11s stood at $ 66.5 billion at the beginning of this calendar year, the pullout triggered a collapse in stock prices. [...]
[...] This was despite the sale of dollars by the RBI, which was reflected in a decline of $ 25.8 billion in its foreign currency assets between the end of March 2008 and October Devaluation in Mutual Fund Rs. Cr Mutual Reserve & Surplus Unit Capital Fudn Effect on Steel Industry 60% Slowodn in Production In Sales CRM NP * CRM = Consumption of raw material * N.P. = Net Profit Effect on Cement Industry In Sales CRM N.P. * CRM = Consumption of raw material * NP = Net [...]
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