With increased global integration, the Indian economy now is subject to greater influence of global business cycles. The correlation between the cyclical component of the index of industrial product (IIP) of the advanced economies and India has risen to 0.50 during the period 1991–2009 from 0.20 in during the period 1971–1990 (Chart 1).
1  See Dr. D. Subbarao (2008), “Mitigating Spillovers and Contagion – Lessons from the Global Financial Crisis”, Speech delivered at the RBI-BIS Seminar at Hyderabad on December 4, 2008.