Exploring the impact of economic austerity on financial sector in india.

Abstract

Along with the beginning of financial reforms underneath new economic policies, India experienced a fundamental change in its monetary and fiscal policies. Under the neoliberalism regime, "good finance" and "discipline" were the defining characteristics of fiscal policy, but "stability" was the only objective of monetary measures. Such monetarist theories and methods have likewise cast a shadow over the global economy. The theoretical shortcomings of monetarism are emphasized in this essay, and the repercussions of such policy reforms in India during in the global recession—are investigated. In addition to impeding the restoration of output and employment, which had an impact on income distribution, such measures failed to achieve stable prices, which was their stated goal. This analysis concludes that these macroeconomic policies have led to stagnation.

Indian banks were largely unscathed by the immediate bad effects of the economic downturn due to Nation's financial sector's minimal connectivity with the global banking system. However, as the financial crisis turned into a filled global economic collapse, India was not able to escape the second-round effects. Indian financial institutions, trade flows, and currency markets have all been affected by the global financial crisis.