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Yes. It is not a question of bad effects in future but Indian economy is currently facing it. I think being the largest economy in South Asia, India is relatively more exposed to the current economic crisis – not only current one but when ever such crisis happens. The evidence so far shows significant losses in the stock market and a reduction in the flow of foreign capital. India's prospects will be hurt by the reduction in capital flows and possible slowdown in the growth of exports. The reduction in capital flows and slowdown in the growth of exports and also the foreign remittances may adversely effect. The Bombay Stock Exchange Index, or Sensex, tumbled 6% to a two-year low. The stock market is choppy, there's been a credit squeeze, interest rates are up, and banks continue to rein in loans as inflation hovers at 12%. For the first time in five years, the central bank cut the cash reserve ratio—the amount of funds that banks have to keep with the Reserve Bank of India—by 50 basis points, to 8.5%, on Oct. 6. The Securities & Exchange Commission of India eased some restrictions on foreign portfolio investors. The exchange rate is now about 49.95 Rupees to the Dollar, is its lowest level in the last 5 years. The weak rupee is of little help to exporters. The foreign institutional investors pulled out close to $10 billion from India, dragging the capital market down with it. The only positive point is in the oil prices which is continually in decrease. But in the midst of the crisis going on in the world economy it will not going to benefit to countries all over and particularly to Indian economy.
(Rated by 5 Council Members)
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