The document discusses liquidity crunch, its causes and potential solutions. It defines liquidity crunch as a shortage of money supply. It occurred in India due to factors like FIIs outflows, RBI stabilizing the rupee, and decreased government spending following the global financial crisis. This led to importers and exporters being hurt. Suggested solutions include cutting CRR and SLR rates, decreasing interest rates, increasing FDI and government spending to improve the money supply situation. While a short term issue, the liquidity crunch was exacerbated in India by the global crisis and could hamper growth if not addressed.