GLOBAL ECONOMIC CRISIS: CAUSES, IMPACT ON INDIAN ECONOMY, AGRICULTURE AND FISHERIES

The global economic crisis started in United States of America mainly due to ‘sub-prime mortgages’ where interest rate was slower down and there was a great demand for housing loans. Later, American banks repackaged this debt to worldwide financial instruments called ‘Collateralized debt obligations’ and sold them worldwide, which resulted in unaffordable mortgage payments and many people defaulted or undertook foreclosure. Then this mortgages crisis affected worldwide. Different views on the reasons of the crisis include sub-prime mortgage, securitization and repackaging of loans, excessive leverage, mismatch between financial innovation and regulation, fair value accounting rules, typical characteristics of US financial system, failure of global corporate governance & complex interplay of multiple factors. Developed countries have so far been the most affected, with a decline in FDI inflows in 2008, mainly due to sluggish market prospects. Flows into developing economies continued to grow in 2008, but at a much lower rate than the year before. Indian economy and agriculture cannot be completely insulated from the global and domestic economic recessions. The impact of economic crisis on Indian agriculture and fisheries were transmitted through three distinct channels, viz., financial sector, exports and exchange rates, and the impact manifests itself in several direct and indirect ways. Some of the impacts were decreased GDP growth rate, high inflation, FDI inflows and international trade.