Global Financial Crisis and India’s Private Corporate Sector

The global financial crisis that hit the world economy in 2007–08 has had the most intense and widespread impact in the history of the modern economy. Although India stayed relatively insulated from this crisis for the most part, growth has faltered nonetheless. While a lot has been said about the impact of the crisis on macroeconomic indicators like gross domestic product growth, inflation, etc, this study examines the same specific to the Indian private corporate sector. We find that there are three channels—debt servicing costs, foreign inflows, liquidity crunch—through which the economic recession played out to create significant challenges for the corporate sector and its profitability.