A brief introduction about the global financial breakdown that made many economies to stumble over and a few major implications that followed this crisis. I've also laid down few major points of policies that the Indian Govt. took back then to retaliate to this glitch. By Arnav Pati from Utkal University, Odisha. (Masters in Analytical and Applied Economics).

1. THE GLOBAL FINANCIAL GLITCH
2007-’08
BY
ARNAV PATI
EXAM ROLL NO.
10120V133 005
UNDER THE SUPERVISION OF
Dr. (Mrs.) APARAJITA BISWAL

2. Why it happened?
A. Subprime Mortgage Crisis:
banks would keep on lending to customers
with low credit worthiness
B. Housing Bubble:
rapid increases in valuations of real property
such as housing until they reached
unsustainable levels and then decline

4. What effects did it bring upon?
A. Thousands of job-cuts to reduce costs-to-foreign
companies
B. Drastic downturn of stock-markets as investors
lost their investments recapitalising their firms
followed by deep business pessimism
C. Affected developing nations through capital
account balances and foreign exchange
reserves
D. Hence developing economies struggled with
sluggish overall growth and consequently
unfavourable macroeconomic indicators

5. Was India affected?
A. Yes unfortunately India was affected by the
financial breakdown in the US
B. India got affected in 3 ways:
1. Financial markets: stock markets have foreign
investors or foreign clients of domestic firms
2. Trade flows: The FIIs withdrew money from
India to recapitalise their financial bankruptcy
3. Exchange Rates: The Indian Rupee lost its value
relative to the strengthening Dollar as firms
started to buck up

8. How did the Indian Government tackle this crisis?
A. To loosen the monetary policy, the RBI injected
liquidity by:
1. lowering CRR from 9% to 5%
2. lowering Repo Rate from 9% to 4.75%
3. lowering Reverse Repo Rate from 6% to 3.25%
4. resorting to Open Market Operations
(outright purchase of government securities in
the secondary market)
B. Increasing farm loans and credit financing
windows for SMEs
C. A large food and fertilizer subsidy bill was
introduced

9. References
A. Amit P. Shah’s Article on ‘The Global Meltdown
2007’ featured on the NY Times
B. Investopedia’s links on ‘Bad Investing’.
C. Historical Stock Exchanges Data from BSE India
Website
D. RBI Weekly Statistical Data 2006, 2007, 2008
E. The US Census Bureau Statistics Data

10. THANK YOU