In 2008, the global economy was in deep trouble due to profligate lending practices at high interest rates by US banks. Subprime lending was the main factor for the global meltdown then.
This time, many factors have contributed to the turbulence in the global economy. Greece is grappling with its debt burden and the Chinese stock market is plunging, with a conspicuous sell-off in the Hang Seng index. The People's Bank of China devalued the yuan in the hope of reviving exports. Global markets succumbed as Chinese stocks crumbled.
As a prominent trading partner of China India has to bear with the the former's tenuous economic position. August 25 was another Black Monday for stock markets in India. The market has now somewhat rallied back.
Reserve Bank of India Governor Raghuram Rajan had warned about the present economic situation. However, he has reiterated that markets will bounce back as the indicators are quiet positive. He said the central bank could make use of $350 billion to rein in the rupee volatility.
Rohan Anand Odisha
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