INDIA
RED FORT, NEW DELHI, INDIA
Camilla Sutton reports
THANKS to the conservative lending policies of the Reserve Bank of India, the Indian economy was only mildly affected by the global recession of
2008-09. Recessionary pressures may have impacted
the export sector, but to combat this, Indian entrepreneurs shifted their attention to develop and deepen the
rural domestic market. Optimism in the Indian business
community is high.
SAVED BY CONSERVATISM
The global financial crisis had an impact on countries
across Asia, and India was no exception. Foreign
exchange rate pressures, lower capital markets activity,
higher funding costs and limited access to external debt
funding were some of the effects of the financial crisis
on Asian businesses. Now though Asia appears to be
emerging stronger than most other regions, with
nations like India leading the way.
The effect of the economic crisis on India was exac-
erbated by the terrorist attacks in Mumbai in November
2008 and the uncertainty around the outcome of the
elections in May 2009. ‘The election of the Congress-
led UPA government with an even stronger majority,
allayed fears of liberalisation policies taking a back seat
to other political ideologies,’ explains Sandeep Katwala,
a partner and Head of the India Group at Linklaters.
‘The Bombay Stock Exchange’s SENSEX gained 2000
points on the first day of trading after the announce-
ment of the election results. At the same time, key eco-
nomic indicators suggested that the economy was
recovering and in a fairly robust manner – GDP growth
rate was positive and the agriculture and service sectors
were looking healthier.’
While India’s banking sector suffered from a liquidity
crunch like its global counterparts, strict banking regu-
lations in India went a long way to ensure that the sec-
tor was not exposed to the exotic derivative instruments
or unsupervised mortgage lending that triggered the
global meltdown.
‘The Reserve Bank of India’s (RBI) conservative
