Year 2008 brought crucial time for many people around the globe. Exactly 7 years after, when people witnessed World Trade Center’s biggest crisis in history of America, Lehman Brother’s, the fourth largest bank of US, announced $3.9 billion loss on 10 September 2008, and filed for bankruptcy protection 5 days later. Which is considered as the largest bankruptcy case in history US investment banking, as it was holding around 600 billion assets.
This spark went big and spiked a wave of fear among all large financial institutions. Though governments tried to prevent it, by bailout of banks/organizations, but still stock markets dropped worldwide. This wave hit many markets like real estate, software businesses and manufacturing industries and caused them to collapse. It reduced the consumer wealth drastically and led to downshift in economy activities all over the world. It’s called as 2008 financial crisis or 2008 global recession, which is considered as biggest after world war. It lasted for 4 years from 2008 to 2012 and took jobs of millions of people. The wave started from US hit Europe in late 2009 causing to collapse European economy. It’s known as Eurozone crisis.
Why India survived 2008-12 crisis?
Well, its an interesting and debatable topic. Many says it did affect India but not Indians whereas some says it didn’t.
I too believe that, crisis did affect India but not Indians. If you observe the causes of this financial chaos, then you will find that only countries which were dependent on US or Europe economy got hit.
If you look back in history, India opened doors to globalization in 1991. Former Prime Minister of India P. V. Narsimha Rao spearheaded the economic liberalization policies in early 1990s. Much before that, in 1969, Prime Minister Indira Gandhi had taken a brave move of nationalization of banks. She nationalized 14 major banks of India including the oldest State Bank of India. This move was first criticized by many, even by Supreme Court, but later stood fruitful for growth of overall Indian economy. It improved the geographical coverage of banks and cause to rise in number branches nationwide focusing on rural regions. This decision increased household savings and encouraged investments in small-medium scale enterprises (SMEs) which in turn filled the gaps and brought growth in industrial and agricultural sectors. It led industrial and agricultural areas to ground their roots firmly, which then became the pillars of growing Indian economy. I feel, these were the strong reasons behind survival of India from crisis. ( But things will not be similar next time. )
However some manufacturing and automobile industry does saw little slowdown in growth rates but time to time ‘relief’ packages released by government and RBI saved them from drowning. Software industry felt a gentle impact as many of software business were working for clients half across the globe, but somehow, it also managed to stay above the water.
New Government, new policies
It is now well-known that, policies laid by new government are changing the scene dramatically. Prime Minister Modi is the playing CEO like key role and trying to make India, the center of gravity for all. Due to his still-going efforts to establish and increase relationships with other countries, while staying at the frontier like High King Shivaji, the global investment sector is being stirred and attracting the flow of billions of dollars in the market.
After years, our stock markets has seen the great rise in numbers and increase in GDP. New investors are coming in which will start new projects and generate new opportunities for career seeking youth. So, let’s hope it continues to rise and lasts forever.