Impact of Global Meltdown on India Chhitiz Kumar * This presentation is from one of the guest lectures delivered by the author at B-School.

It’s a Global Village Key Drivers World Trade Growth (see Annexure 1) International Finance Capital Growth of MNC (control $ 30 Trillion out of $ 65 Trillion global GDP) Enablers Technology Transportation & Logistics

Key Drivers

World Trade Growth (see Annexure 1)

International Finance Capital

Growth of MNC (control $ 30 Trillion out of $ 65 Trillion global GDP)

Enablers

Technology

Transportation & Logistics

Strategic questions … Capitalist (for Profit) and Socialist (for Losses)? Reserve Currency – Why US $ ? Efficient Market Hypothesis Role of Global Institutions – IMF, World Bank etc Role of Individual Govt. vs. the World. Need for a Global Regulator vs Country Regulator? Risk Management vs Financial Innovations “ Greed is Good”…Really?

Capitalist (for Profit) and Socialist (for Losses)?

Reserve Currency – Why US $ ?

Efficient Market Hypothesis

Role of Global Institutions – IMF, World Bank etc

Role of Individual Govt. vs. the World.

Need for a Global Regulator vs Country Regulator?

Risk Management vs Financial Innovations

“ Greed is Good”…Really?

Impact on INDIA The Good Part Domestic Demand driven Economy : Export/GDP at 25% (China 40%) Well –diversified export portfolio (See Annexure 2) Inflation is down : Commodity Stable Banking System : No Bankruptcies Prudent Lending Norms : No Subprimes Crises Services driven economy The Trouble is … Liquidity Crunch and Cost of Capital Project delay/postponement Forex Reserves flucuations – FII withdrawl Exports – Challenging Global Demand scenario Ironically, $ is currency of choice !! GDP Projections lowered

The Good Part

Domestic Demand driven Economy : Export/GDP at 25% (China 40%)

Well –diversified export portfolio (See Annexure 2)

Inflation is down : Commodity

Stable Banking System : No Bankruptcies

Prudent Lending Norms : No Subprimes Crises

Services driven economy

The Trouble is …

Liquidity Crunch and Cost of Capital

Project delay/postponement

Forex Reserves flucuations – FII withdrawl

Exports – Challenging Global Demand scenario

Ironically, $ is currency of choice !!

GDP Projections lowered

Impact on Indian Banking System Short Term (next 12 months) – Watchful, reactive to global and national events . Medium Term (1-3 Year) Various national regulators – Reserve Bank of India, SEBI, IRDA, MoF will stay hawkish Entry of MNC Banks to India will be delayed/abandoned PSU Banks will get stronger and spread overseas. FII Inflow in Indian Markets, PE deals Retail Banking will revive NBFC will have to find new Business avenues/models

Short Term (next 12 months)

– Watchful, reactive to global and national events .

Medium Term (1-3 Year)

Various national regulators – Reserve Bank of India, SEBI, IRDA, MoF will stay hawkish

Entry of MNC Banks to India will be delayed/abandoned

PSU Banks will get stronger and spread overseas.

FII Inflow in Indian Markets, PE deals

Retail Banking will revive

NBFC will have to find new Business avenues/models

ThankYou E –mail : [email_address] LinkedIn : http://www. linkedin .com/in/ chhitiz Mobile : +91 - 9711013990

Annexure 1 -World Trade (in $ Bn) Source : WTO, 2008 Report

Annexure 2