Table of Contents
- Investors lost more than Rs 7 lakh crore in a single trading session.
- $1 decline in Crude oil price helps India reduce its trade deficit by almost Rs.10,000 crore
FALL IN OIL PRICES
- The epicenter of the crash was a 30% slump in global crude prices following a price war launched by Saudi Arabia.
- Brent crude fell below $34 a barrel, raising fresh fears of a global recession.
- A fall in oil prices is good for India when it happens in
- The oil price drop triggered an unprecedented pull-out from risky assets.
- Investors moved to safe havens like bonds and gold.
- This leads to drying up of foreign fund flows.
- Overseas investors pulled out close to $1 billion, taking their one-month pull out close to $4 billion.
CORONAVIRUS
- Thus overall, the oil price drop, coupled with issues such as coronavirus spread and turmoil in the domestic financial sector Has led to this biggest single day decline in Indian
WHY THIS IS WORRYING FOR INDIA?
- Today, there is a global crisis akin to 2008 —
- India was a far stronger economy in 2008, when the global financial crisis hit.
- But we are now unprepared to withstand a crisis of this kind, given the fragile domestic economic situation.
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