The financial crunch has also sucked out liquidity from India's domestic markets, because foreign investors started to pull out their capital to support themselves on their home turf. Dependence on such capital inflows to finance its current account deficit suffered.
The Indian rupee's volatility poses another risk. As on October 2008, it depreciated by 24 per cent in the previous 12 months.
While currency depreciation led to growth in exports (mitigating low demand) by 35 per cent during April-August 2008, compared with the same period last year, importers have been feeling the heat.
Image: A artist applies one rupee coins to the face of Lord Ganesh at his roadside workshop in Chennai. | Photograph: Dibyangshu Sarkar/AFP/Getty Images
Also read: 150 years old, and still going strong
Powered by 
| Live updates on money.rediff.com |
|
Advertisement
