Financial turmoil which surfaced in August 2007 in the US financial system?as a result of defaults of sub-prime mortgage loans?has blown into an unprecedented financial crisis engulfing international money, credit, equity and foreign exchange markets. It was preceded by an extended phase of buoyant world economy characterized by output expansion, burgeoning world trade, favourable financial and economic conditions, liquidity overhang and low interest rates. Economists termed it as a period of Great Moderation.

    The Great Moderation soon turned into Great Dismay when global financial confusion?simmering since August 2007?began unleashing its full fury in September 2008 with a series of failures of major financial institutions. The crisis has traversed from the financial to the real sector and it now looks like that the recession?which is keeping world governments on tenterhooks?will be deeper and the recovery longer than earlier anticipated. Though adversely affected by global meltdown, Indian economy has shown considerable absorption capacity and resilience.

    This book is all about current economic crisis, its origin, causes, impact, world response, world economic outlook and lessons to be learnt. The focus of the work, however, is on the impact of global economic crisis on India and the policy response by the Government of India, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and other agencies. Being topical, the work will interest a cross-section of readers including teachers and students of economics, commerce, management and also political leaders, analysts, academicians and laypersons who are mystified about a subject unrelated yet close to them.

1. Capitalism and Business Cycles: History and Views - Views of Classical Economists; The Great Depression; Keynesian Economics; Modes of State Intervention; Contagious Nature of Business Cycles.

2. Origin, Causes and Impact of the Present Crisis - Period Preceding the Present Crisis; Origin of the Present Crisis; What Triggered Global Financial Crisis?; Intensity of the Crisis; Impact of the Crisis; Contagious Nature of the Crisis and the Rejection of De-coupling Hypothesis; Relative Resilience Exhibited by Developing Countries.

3. World Response to the Crisis - Bailout Packages; G-20 Decisions, April 2009; Country-wise Response to Financial Market Turmoil; Assessment of Damage Control Measures; Summing Up.

4. Impact of Global Crisis on India - Integration of Indian Economy into the World Economy; Transmission Channels of Global Crisis to India; Impact on Financial Markets; Impact on Fiscal Consolidation; Impact on the Real Economy; Reasons for Relative Resilience of the Indian; Economy; Summing Up.

5. Policy Response to Global Crisis by India - Remedial Measures Taken by the Government; Remedial Measures Taken by the Reserve Bank of India (RBI); Measures Taken by Securities and Exchange Board of India (SEBI); Assessment of Policy Response; Summing Up.

6. Outlook for the World - Advanced Economies; Emerging and Developing Economies; World Trade Scenario.

7. Outlook for India - Strengths of the Indian Economy; India`s Robust and Resilient Financial Sector; Challenges Ahead; Summing Up.

8. Summing Up - How it All Started?; Adverse Impact on Global Economy; Collapse of Decoupling Hypothesis; World Level Remedial Measures; India Impacted but Passes the Litmus Test; Policy Response by RBI; Future Scenario.

9. Lessons - As You Sow, So Shall You Reap; World Economies Sink and Swim Together; Globalisation is a Double-edged Sword; Foreign Institutional Investors (FIIs) are Fair-weather Friends; Market Discipline Does Pay at the End of the Day; Moral Suasions Still Call the Shots; Capital Account Liberalisation: Think Twice before You Leap; Bailout/Rescue/Stimulus Packages Need Careful Crafting.

Appendix 1: Highlights of the Central Budget (Final) Presented to Parliament by Shri Pranab Mukherjee, Minister of Finance, on July 6, 2009

Appendix 2: Economic Reforms in India Since

    M.M. Sury received his B.A. (Hons.), M.A., and Ph.D. degrees in economics from the University of Delhi. He taught economics in the same university for 42 years. Specialising in fiscal economics, he has published extensively on Indian fiscal system in recognised national and international journals, such as Small Industry Bulletin for Asia and the Pacific (United Nations, Bangkok), Bulletin for International Fiscal Documentation (International Fiscal Association, Amsterdam), Asian-Pacific Tax and Investment Bulletin (Singapore), Journal of the Indian School of Political Economy (Pune), Indian Economic Journal (Bombay), and Margin (New Delhi).

    Dr. Sury was a Visiting Fellow at the International Bureau of Fiscal Documentation, Amsterdam (May 1989), a Fellow at the Indian Institute of Advanced Study, Shimla (1991-92) and a Visiting Fellow in the Department of Law and Management, University of Mauritius, Mauritius (September- October, 2000). He was Economic Adviser, Delhi State Finance Commission (1996-97). He is President of the Indian Tax Foundation (ITF), New Delhi.