Impact of Recession on India & Industry

8/6/2019 Impact of Recession on India & Industry

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IMPACT OF RECESSION ON INDIA & INDUSTRY IMPACT OF RECESSION ON INDIA & INDUSTRY

Presented By:

Darshan Shah

WRS017132



What

Is

Recession?



What is Recession?What is Recession?

� A Recession is a contraction phase of the business cycle.

� National Bureau of Economic Research (NBER) is the

off icial agency in charge of declar ing that the economy is in

a state of r ecession. They def ine r ecession as :

³signif icant decline in economic activity lasting mor e than af ew months, which is normally visible in r eal GDP, r eal

income, employment, industr ial production, and wholesale-

r etail sales´.



What is Recession?What is Recession?

� An economy typically expands for 6-10 year s and

tends to go into a r ecession for about six months to 2

year s.

� A r ecession normally takes place when consumer s

loose conf idence in the growth of the economy and

spend less.

� This leads to a decr eased demand for goods and

ser vices, which in turn leads to a decr ease in

production, lay-off s and a sharp r ise in unemployment.



WHEN YOUR

NEIGHBOR

LOSES HIS JOB

WHEN YOU

LOSE YOUR JOB

Difference Between Recession & DepressionDifference Between Recession & Depression

Recession Depression



Causes Of Recession:

Normal Economic Cycle

Consumer s lose conf idence in growth of economy & spend less

Actions taken to control the money supply in the economy

Relaxed policies in lending practices

Economic activity becoming unsustainable

Factor s that stunt growth in Economy, such as spiking oil pr ices or war



ImpactOf

Recession:



y Reduced liquidity in the Indianeconomy.

y Reduced job opportunities.

y Reduced industrial output.

y Stock Market is lingering in thebottom.

y Real estate market has started totake a beating.

y Inflation has increased.

y GDP has come down.

y Change in consumer behaviorsand purchasing power.

Impact On:



Impact On:y A slowdown in the US

economy is bad news forIndia.

y Indian companies with bigticket deals in the US, areseeing their profit marginsshrinking.

y Projects that are halfway to

completion, or companiesthat are stuck with cash f lowissues on businesses that are yet to reach break even, will

run out of cash.



Impact On:y Dip in the employment

market

y Downsizing in many other

fields as companies cutcosts.

y Significant drop in newhiring.

All of this changesthe complexion of the job market.



How To Know Recession?



How to come out of recession?How to come out of recession?Government does not have direct control on Producer s¶ & the

Consumer s¶ behavior; But, they can influence millions of

Producer s & Consumer s with Government¶s policies:

Government has 2 plans

Fiscal Policies

(By Govt.)

Monetary Policies

(By RBI)

Government influences

economy by changing

how it spends

and collects money

RBI manipulates

the available supply of

money in the country



Fiscal

Policies

Tax cuts for

businesses or

for individuals

Mor e Spending

by Govt. to

cr eate jobs

Automatic

f iscal policy,

Unemployment

Insurance

Mor e money

available for

spend

ing

Individuals get

salary and spend

money

Some income for

unemployed

people to spend

Demand picksUp

&

Market

can recover



Monetary

Policies

Reduce Reser ve

Ratio

Lower the

inter est rates

Use its own

reserved

money to buy

Govt. bonds

Mor e money

available for bank

to give loans

Individuals take

mor e loan

It becomes an

income to Govt.

to inject money

into the market

Demand picksUp

&

Market

can recover



On the same note:

Prime Minister, Mr. Manmohan Singhsuggested:

y

A

coordinated fiscal stimulus by countries thatare in a position to do so would help to mitigatethe severity and duration of the recession

y It would also send a strong signal to investorsaround the world. Resort to fiscal stimulus may

be viewed as risky in some situations, but if weare indeed on the brink of the worst downturnsince the Great Depression, the risk may be worth taking.



Conclusion :Conclusion :

y India is a different economy and known as one of the mostpromising economies in terms of growth and investment.

y India, with $1.1 trillion GDP is the second largest among the world's developing economies.

y Indian economy is based on robust fundamentals andenjoys the status of one of the most dynamic and growingeconomies in the world.



Conclusion :Conclusion :

Nation¶s r ecession is controlledby the actions of everybody

living in that country.

If we advise our people to save money, then, the multiplication effect is that

the demand will not pickup and recession will continue; Very peculiar!!!!!

But, I am not misguiding you; Just think from a macro level, if everybody in the

country stops spending, what will happen?



Thank You..

Pr esented by:

Dar shan Shah

Impact of Recession on India & Industry

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