Description

The basic objective of the project is to study the nature of the financial crisis and its possible impact on the ongoing recession in the global economy.

This project deals with the causes of the global financial crisis and an analysis of its effects on the Indian economy.

Starting in the summer of 2007, the United States experienced a startling contraction in wealth, triggered by the subprime crisis, thereby leading to increase in risk spreads, and decrease in credit market functioning. During boom years, mortgage brokers enticed by the lure of big commissions, talked buyers with poor credit into accepting housing mortgages with little or no down payment and without credit checks. Higher default levels, particularly among less credit-worthy borrowers, magnified the impact of the crisis on the financial sector.

In India, IT companies, with nearly half of their revenues coming from banking and financial service segments are close monitors of the financial crisis across the world. The IT giants which had Lehman Brothers and Merrill Lynch as their clients are TCS, Wipro, Satyam, and Infosys Technologies. HCL escaped the los to a great extent because neither Lehman Brothers nor ML was its client.

The government has a reason to worry because the ongoing financial crisis may have an adverse impact on the banks. Lehman Brothers and Merrill Lynch had invested a substantial amount in the stocks of Indian Banks, which in turn had invested the money in derivatives, leading to the exposure of even the derivates market to these investment bankers.

This project encompasses all the issues related to the impact of the crisis on the Indian economy in the current global business environment. India has been impacted indirectly by the crisis as the Indian economy is strongly dependent on developing countries like the United States and the European Union as major export destinations. Both services and merchandise exports of the country have been severely affected due to the crisis. This project aims to study the various aspects of the economy which have been affected by the credit crunch and the steps taken to pull the global economy out of the plummeting condition. An analysis of the effectiveness of the stimulus measures taken will also form a part of the research.

It also seeks to explain the measures already taken to pull the economies out of the recession and planning into other measures which can be implemented for a faster recovery of the economy.

Methodology:

Primary and Secondary Research