Global Recession & Indian Economic Development

In its publication World Economic Outlook (October 2008), the IMF placed the estimated world output growth at 3.9 percent in 2008 which represented a significant slide from a level of about 5.0 percent in 2006 and 2007. By early November, the IMF had revised its forecast for global growth downwards3/4from 3.9 percent to 3.7 percent for 2008, and from 3.0 percent to 2.2 percent for 2009. Several countries, notably US, UK, Euro Area and Japan are all officially in recession. Confidence in global credit markets continues to be low, and credit lines remain clogged. The tight and hesitant conditions in the credit markets are precipitating erosion of demand which, in turn, is feeding a recession-deflation vicious cycle. Central banks around the world are responding to the developments by aggressive and unconventional injection of liquidity, monetary easing and relaxation of collateral norms and eligibility criteria for their lending to financial institutions. The recent developments suggest that impact is likely to be more protracted and deeper than envisaged by the IMF. In an increasingly globalised economic milieu, these external developments have a major impact on world economy, including the emerging market economies and developing countries through both direct and indirect transmission channels. The present work contains 18 papers contributed by scholars on the subject who have analysed the repercussions of the global downturn on the growth prospects of the Indian economy.