Whether India can face sub-prime crisis in future?

From my last article on sub-prime crisis one can figure out the circumstances, which had triggered crisis in US. I would like to discuss on some those circumstances with may have an impact on the Indian economy.

Some of the circumstances, which led to the crisis, are
1. Real estate marketing and investments in Wall Street floating high.
2. Craze among people to invest in those areas in expectation of high returns.
3. Wrong usage of financial liberalization by the banks by lending high loans to the people who are categorized as “sub-prime”
4. Increase in the mortgage rates for the loans acquired due to the various changes in the financial structure.
5. Big downfalls in the US share markets.

If one can observe the trends in the real estate marketing and the share markets in the recent past, a clear boom in its development can be observed. Lands and building which are bought in thousands before a decade is reaching as high as in crores today and our citizens had started showing interest on investment in share as never before and banks with a view to expand their business had begun to sanction loans with minimum security. These may correspond to the first three circumstances.

With the inflation rates soaring high to a new limit, banks also hiked the rates of interest for various types of loans extended and with sub-prime crisis turning out to be a global one had affected the companies that were totally or partially the service provider for Europe and American companies. So as a result of the crisis in the western nations our share markets had faced a severe downfall and the valve of rupee to deplete reaching 1$=47 rupees in the global market. These can be compared to the 4&5 circumstances.

But with the above comparison one cannot come at the conclusion that our economy is going to face such a crisis. When compared to US, we are intensively strong in our financial stability and all the above, Indians are known for their saving nature from the age-old time. So it is my personal view that India can withstand any such crisis, which is going to take part in future and to recover fast than any nation.

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