The global financial meltdown in developed countries caused a major economic slowdown in India. The crisis started in 2007 with risky sub-prime mortgages in the US, leading to a financial meltdown and bankruptcies worldwide. Even though India's financial system was not directly involved, it still felt the impact through trade, finance, and confidence channels. The collapse of big financial institutions like Merrill Lynch and Lehman Brothers worsened the situation, creating a global financial crisis that affected all industrialized countries.