Revival lessons from 2008 stimulus

The persisting downturn is resulting in lower revenues and rising deficit, reducing the space for a fiscal stimulus

When the global financial crisis occurred in September 2008, India’s growth rate over the previous years had been averaging 8.9 per cent. There was initially a sense of complacency that India would remain untouched as it had been cautious and had not deregulated its financial system. There was no exposure to the high-risk financial products that caused the crisis in the US. So, the precipitous fall that occurred in the Indian economy came as a shock. India’s integration with the global financial system had, in reality, become far greater than was assumed. By November, there was a crisis. The government