US FINANCIAL CRISIS AND ITS IMPACT ON PRIVATE HOUSEHOLD SAVINGS
TABLE OF CONTENTS
1) INTRODUCTION AND IMPACT OF US FINANCIAL CRISIS
2) ANALYSIS OF GROSS SAVINGS RATE
3) ANALYSIS OF HOUSEHOLD SAVINGS AND HOUSEHOLD SAVINGS RATE
4) ANALYSIS OF GROSS FIANANCIAL ASSETS AND GROSS FINANCIAL LIABILITIES
5) ANALYSIS OF COMPONENTS OF GROSS FINANCIAL ASSETS AND GROSS FINANCIAL LIABILITIES
IMPACT OF US FINANCIAL CRISIS ON INDIAN ECONOMY
The financial status of US in the years 2004 to 2006 was of high growth and modernisation after the global slowdown of 2001, there was abundant liquidity of funds and low interest rates. The demand for high yield and growth led to conditions that were responsible for deepening of global financial crisis and bubble creation of assets and market of commodities in US.
One of the major impacts of the crisis in US on India was on GDP of India. India had a, what we could say a comfortable growth rate of 6 to 7 precisely it was 6.8 before the effects of US financial crisis trickled down in India in 2008. Although the effects were very less as compared to other western countries but what made it difficult was that it was first time India was affected by the crisis in the west. But all turned out well in the end with India resuming a GDP of 7.4 in the following year only.
Inflation was another major factor that impacted the Indian economy because of the crisis According to rating companies the commodities index of India came to the lowest point in December 2010. This resulted in increase of inflation of India for almost a year and so.
Interest Rates in India had to be controlled by RBI because of the crisis, the tightening policy of RBI helped slowdown the interest rates so that the manufacturing sector is not affected and continues to grow at a considerable rate, which in turn affects the disposable income of major part of Indian population.
The effects on exports and imports were considered the most important affect of US financial crisis on India. As US forms a large part of export market of India, financial crisis in US did affect the India as well as other trading partners of US and this played a major part in trickling down of crisis impact on Asia as well as India. ON the other hand import due to decline in exports the impact on imports was seen as fall in fuel prices that was a welcome effect on part of India as a major chunk of Indian spending on imports is on oil.
The impact of financial crisis on equity market was also severe in US as compared to India, risk aversion was seen in US but in India it was still not that visible due to assurances of RBI and tightening policies adopted by it.
Now as to discuss the impact of US financial crisis specifically on private household saving , some terms related to private household savings and components that make up the private household saving as well as gross savings in India need to be discussed.
ANALYSIS OF GROSS SAVINGS RATE
Our gross domestic savings has been increasing since 1950s with minor decrease in 1970s and slight increase in 1980s.
|COUNTRY |1990 |1995 |2000 |2005 |2007 |2008 |2009 | |INDIA |22.8 |24.4 |23.7 |33.5 |36.9 |32.0 |33.8 | |CHINA |39.1 |43.5 |37.5 |47.6 |50.5 |51.8 |52.1 | |BRAZIL |21.4 |16.5 |16.5 |19.8 |19.8 |20.9 |16.5 | |MEXICO |22.0 |22.6 |21.9 |22.3 |24.2 |24.9 |20.9 | |FRANCE |21.2 |19.7 |21.4 |19.5...
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