How the global financial crisis affects India?
The key question confronting the economy now is the backwash effect of the American (or global) financial crisis. Central banks in several countries, including India, have moved quickly to improve liquidity, and the finance minister has warned that there could be some impact on credit availability. That implies more expensive credit (even public sector banks are said to be raising money at 11.5 per cent, so that lending rates have to head for 16 per cent and higher -- which, when one thinks about it, is not unreasonable when inflation is running at 12 per cent).
For those looking to raise capital, the alternative of funding through fresh equity is not cheap either, since stock valuations have suffered in the wake of the FII pull-out. In short, capital has suddenly become more expensive than a few months ago and, in many cases, it may not be available at all.
The big risk is a possible repeat of what happened in 1996: Projects that......

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Title: Global Financial Crisis
Approximate Word Count: 1713
Approximate Pages: 7 (250 words per double-spaced page)

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