Global financial crisis and its impact on indian economy

Globalization has ensured that the Indian economy and financial markets cannot stay insulated from the present financial crisis in the developed economies. Global financial crisis is commonly believed to have begun in July 2007 with the credit crunch. The credit crunch may have its root in the US but now its global problem. The impact of this will be three fold: the element of GDP growth driven by offshore flows will be diluted; correction in the asset prices which were previously pushed by foreign investors and demand for domestic liquidity putting pressure on interest rate. India should quickly focus on alternative remedial measure to limit damage.