A Synoptic Look on the Impact of Global Financial Crisis on India’s Gross Domestic Product
Keywords:
Financial Crisis, Trade, Aggregate DemandAbstract
In this paper, the impact of global financial crisis on India’s Gross Domestic Product (GDP) is investigated upon in an aggregate demand framework using quarterly data for the period from 1996 to 2010. GDP, consumption expenditure, capital formation and export were found to be co-integrated. Co-integration estimation re-affirms that domestic consumption remains the key driver of India’s GDP growth. The present analysis establishes that though India’s trade sector dwindled and investment activity declined in the aftermath of global financial crisis, its GDP growth slackened only marginally as domestic consumption provided the necessary buffer in limiting the adverse impact of global financial crisis on the Indian economy.
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