Is India immune to the present US financial crisis?

Hi, I have already put my views 8 months back.No country can be immune of any such crisis but India is least affected among the BRIC Economy. Economy of Brazil is in bad shape, Russia has "announced" 9% Fiscal deficit and GDP contraction. China is in "very bad " shape, one being biggest lender to US and secondly, blindly creating huge and huge infrastructure and capacity without thinking of demand side.Indian economy is ofcourse affected, more of those sectors which are related with US-like IT,ITES and Retail which is partly responsible for real-estate bubble which has started encroching now its own profit and  also did mindless expnasion without moving vertically in value chain etc. Indian financial sector is recovering fast, liquidity is not a big issue, although I still feel that liquidity is not reaching to SMEs and others it is meant to.Stable govt. formation and mood of Market is just strengthing my confidence in our economy and business.

Looking at our exposure to global market one can't remain immune from heat of recession. As due to recession the flow of fund block & also purchasing power of the developed country reduce, which is our ultimate destination of export goods.

India is not immune to the crisis in US. US is a major trading partner for India in imports as well as exports. We have lots of FDI and FII investment from US.  Bulk of our forex reserves are in USD. The dollar weakening, resulting from the present crisis may adversely affect the value of our reserves and other assets, receivables etc. FII outflows already affected our stock market and rupee value. Indian stock markets and rupee are doing well only in fits and starts. The USD 700 bn bailout, even if revived may not solve the US and global financial crisis. This bail out according to a reputed US research organisation is a drop in the bucket. The crisis in US will continue to torment the global markets including Indian markets. India becoming a favourite investment destination may be in the long term. India can not be immune from the crisis in US in the short and medium term.

Immune .. completely .. no and not possible. They, the Big Brother and its group have already trapped us and the globe in the brilliant idea of "Globalisation" - now India and rest of the globe is also to "share" burden of crisis knowingly created by their financial system. This Mortgate Banks, iBanks etc in the USA was 'overleveraging' their capacities only to gurner (temporary) profit - they were encouraging third (credit) rated individuals to borrow for even luxarious housings, borrow for lavish consumptions. They  were cunningly creating artificial demand in the society and were gaining from exorbitant interest earnings which ultimately collapsed with all its building blocks. Had they not done these, the real picture of recession and slagging economy in the USA could have come to limelight much earlier, some say seven/eight years past. If noticed at early stage, corrections could have been easier and the entire Global Financial System might not haveimpacted.

 India and some Asian countries are said to be lucky - India, meanwhile, have created domestic demand for goods and services by uplifting the economic conditions of its people. A good-sized 'middle class' is here to consume. Yet, this country may not remain completely "immune" from the turmoil as in both ends, some are exposed. We are to be cautious. Learn the lesson ... over leveraging might take its tole  ?

I do not think India is immune to the financial crisis in America. Although banks in India have very limited exposure in bankrupt Lehmann or Merrill Lynch, its fund exposure that these organisations have in Indian markets, either in the form of stocks, private equity or its contribution in real estate funds that is worrisome. Real estate sector has been dependent on these mega corporations for raising funds and these companies found Indian housing market attractive because of the double digit returns. By unwinding its positions in stocks like Pantaloon, Gujarat NRE Coke etc. Morgan Stanley had ensured that its ready for conversion into bank and our markets tanked, with each of the stocks in which MS had holding taking a huge hit. I expect a few names (read:Fortis, UBS, Deutsche) to come out from Europe in the coming weeks and liquidation of their holdings in our stock indices. Nowhere our markets are insulated from US financial crisis...as is reflected by job cuts in IT sector and freeze in recruitments by most of the banks in the country.

So just hope that US bailout plan works in favour of US economy and investors return to the market...gradually but surely... 

I would say that India will come out of it unscathed.  I refuse to believe that the world economy can be manipulated by few US financial institutions, even if few of them together equal India's GDP.  What is our loss, let's analyze:  It is true that FIIs' activity will be considerably less here.  It is true that low cost funds will dry up.  It is true that major IT markets will dry up too.  But we are not those who get bogged down by all these.  If FIIs do not pump money into Indian market, we Indians should invest in Indian economy.  If low cost international funds are not available, they should be made available in India itself ( I would throw open an article shortly, with a radical view that a taxless governance is possible!!!!).  Ideally, International investments in India should actually increase since it is the Indian economy that is solid and capable of withstanding shocks.  Investor confidence should therefore increase in favour of India.  If US FIIs do not have money to invest in India, let them not do so.   Investment into US were mostly from other countries.  All this money should go to safer and more productive markets now that the US economy has weakened.  Why not India?!

We  are  yet   to  learn  global  economics. We  tend  to  follow  othhers  and  pickup difinancial  instriments  etc., wscarded  yindustries,which  have  failed  in  other  countries. We  shuold  build  our  economy  on  our  strength  ,diversity,democracy,young  intelligent  workforce  etc  and  just  not  copy  what  has  worked  short  term  elsewhere  but  failed in  the  long  run. This  is  our  weakness  we  tend  to  pick  up  others  debtis.