Though sharp eyes noticed the global financial crisis much earlier, it became prominently visible to everyone in September 2008 with the failure, merger and conservatorship of several large financial firms of the United States. The situation rapidly evolved into global credit crisis, deflation and sizeable reductions in shipping and commerce all over the world. The crisis resulted in widespread job cuts across sectors like automobile, airways, retail, real estate, among others.
Some Indian policymakers argued that India would be relatively immune to this crisis because of the strong fundamentals of its economy and a well-regulated banking system. However, the crash in the Indian stock market, triggered by a pull-out of Foreign Institutional Investors (FIIs) funds, October 2008 onwards, is indicative of the integration of Indian economy with the world economy despite claims of decoupling.
Global response to the financial crisis has been prompt, and by and large adequate. There have been relief plans, bailout packages, etc. in many countries of Europe, Asia and America. Federal Reserve reduced its fund rates six times in 2008—from 3.5 per cent to 1.5 per cent and has set a target rate between zero and 0.25 per cent. The European Central Bank and the Bank of England have pumped in billions of dollars in the money-market auction. President Barack Obama has brought another relief package to revive the economy, apart from sector-specific measures like housing rescue plan, and buyback plan of banks’ toxic assets.
The most significant measure being taken is the sweeping overhaul of the financial regulation. In America, hedge funds, private equity firms and derivative markets will come under government supervision for the first time. Institutions like World Bank and the IMF are being revamped. The G20 meeting of 2 April 2009, held in London, can be termed as landmark in many ways. The member countries pledged more than $1 trillion for emergency loans to reverse the recession. They decided to reject protectionism and bring tighter financial regulation. Positive results can be expected sooner than later.
The book Global Financial Crisis, in three volumes, attempts to provide a holistic view of the global financial turmoil. It thoroughly studies the factors that led to this crisis and its debilitating effects on economic growth, employment, industrial production, stock markets, liquidity position, exchange rates, among others. It contains articles by leading economists and experts in the field. It also consolidates, in one source, important documents—speeches, reports, declarations, etc.—relating to the issue.
The book will be useful to the students, teachers and researchers of Economics, parliamentarians, policymakers, economists, and entrepreneurs in India and abroad. Common readers interested in knowing about the present global economic conditions will find it inculcating and informative.
K.R. Gupta is a well-known Economist. He has published over a dozen of books and more than hundred papers in reputed journals, being published in India and abroad. His edited volumes include Studies in Indian Economy, Liberalisation and Globalisation of Indian Economy, Social Capital, Special Economic Zones: Issues, Laws and Procedures and Indo-U.S. Civil Nuclear Deal. He had been teaching postgraduate classes and guiding research for about two decades in the University of Jammu and Kurukshetra University. He has also worked as an Economist in private as well as in public sector. His last assignment was as Economic Advisor to the Modi Enterprises.
