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Global bailout packages touch $ 1.8 trillion

Source: PTI
Last updated on: October 13, 2008 17:29 IST
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As financial turmoil continues to batter world economies, triggering the collapse of a number of financial institutions, the bailout packages from different governments globally is nearing the $ 3 trillion mark -- about three times the size of Indian's economy.

Continuing a spate of billion-dollar rescue plans, the UK administration last week came up with a mammoth 500 billion pounds bailout package (about $ 876 billion), primarily to shore up the fortunes of the nation's banking sector.

Earlier, the US government had moved the historic $ 700 billion rescue plan in response to the deepening credit crisis which has seen the fall of Wall Street icons like Lehman Brothers and Washington Mutual and the distress sale of Merrill Lynch.

Till date, the Bush administration alone has announced bailout packages to the tune of over $ 990 billion.

Joining the likes of the US and the UK, Russia has approved a host of measures estimated to be worth $ 86 billion to salvage the country's banks hit by the credit squeeze.

Recent media reports said the Lower House of Russian Parliament, Duma, has given the green signal for a billion dollar rescue plan. It would entail making about $ 50 billion available to banks and firms which have to refinance foreign debt; the remaining amount would be given as loans to banks.

A handful of European countries have also announced packages worth a similar amount in an effort to save their troubled financial institutions. More packages are expected from the governments in Europe as the crisis is said to be spreading fast in the region.

Even though three Icelandic banks including Glitnir were nationalised by the Iceland government, the exact worth of the rescue package are not yet available.

However, nothing of this sort is expected in India; the country and its financial institutions have remained mostly insulated from any direct impact of the crisis.

Still, the collective bailout packages in the US and Europe, at present at about $ 1.8 trillion, could soon be triple the size of the one trillion dollar Indian economy.

India's GDP is estimated at Rs 46,93,602 crore (Rs 46,936.02 billion) for the fiscal year 2007-08; it stands at just over $ 1 trillion based on the current exchange rate of about Rs 46.8 to a dollar.

From America to Europe, the deepening financial turmoil has seen the fall of big names, especially in the banking industry, such as the collapse of insurance giant Fortis and the extension of a $ 85 billion lifeline to AIG.

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