In contrast, this crisis originated in the most advanced economy, the United States, and hit at the very core of the global financial system. With virtually no buffers to fall back on, the crisis rapidly engulfed the whole world. Much to their dismay, emerging market economies too were soon pulled into the whirlpool. How was India hit by the crisis? India was no exception.
We too were affected by the crisis. Output growth which averaged 9.5 per cent per annum during the three year period 2005/08 dropped to 6.8 per cent in the crisis year of 2008/09. Exports which grew at 25 per cent during 2005/08 decelerated to 12.2 per cent in the crisis year (2008/09) and declined by 2.2 per cent in 2009/10.