ECONOMIC RECESSION IN INDIA & SURVIVAL STRATEGIES

8/7/2019 ECONOMIC RECESSION IN INDIA & SURVIVAL STRATEGIES

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GLOBAL RECESSION

As sure as the spring will follow the winter, prosperity and economic growth will

follow recession.


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INTRODUCTIONIn economics, the term recession

generally describes the reduction

of a country's gross domestic

product (GDP) for at

least two quarters.

a period of reduced economic activity.


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Cont.... a significant decline in the economic activity spread across

the economy, lasting more than a few months, normally

visible in real GDP growth, real personal income,

employment , industrial production, and wholesale-retailsales


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Attributes of recession In macroeconomics, a recession is a negative

real economic growth, for two or more

successive quarters of an year. A recession has many attributes that can occur

simultaneously and can include declines in

coincident measures of activity such asemployment, investment, and corporate

profits.


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Predictors of recession In the U.S. a significant

stock market drop has

often preceded the

beginning of a

recession.

Inverted yield curve

Index of Leading(Economic) Indicators

The three-month

change in the

unemployment rate and

initial jobless claims


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History of recession Great Depression - August 1929 to September 1939:

longest (and deepest) recession of the 20th century

January-July 1980 and July 1981-November 1982: 2years total

July 1990-March 1991: 8 months

March 2001-November 2001: 8 months

December 2007-March 2009: 15 months and

counting.


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US Crisis Hits India When the United States sneezes, the rest of the world

may well catch a cold.... Rich Miller.

US faced major crisis because of: Sub prime mortgage crisis.

Rising oil prices

Global inflation

High unemployment rates

A declining dollar value.

Capital flight in emerging markets.


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Causes Of Recession 2007-2009 Currency crisis

Energy crisis

War Under consumption

Overproduction


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Effects of recession Bankruptcies Credit crunches Deflation

Foreclosures Unemployment Difficulty in borrowing Unemployment

Falling profitability Falling stock market Decline in consumer confidence


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Impacts Of Slowdown in India: A global recession would take a slowdown in global

growth to three percent or less -IMF

The slowdown in US and other developed nations isdefinitely hurting Indian growth story.

The signs of this can be evidenced from the

tumbling share market (BSE & NSE) which shed

more than 50% since Jan 08.


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Impacts Of Slowdown in India: Sectors affected till now are almost all, reason

behind this is:

External Trade of India : 40% of GDP FII`s Investment in share market upto Jan 08:

US $ 65 Billion

FDI in India (Jan 08) : US $ 50 Billion

Estimates of Annual GDP has been lowered to

7.5% from 9%


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Impacts Of Slowdown in India: 70% of IT export is to US, out of which 40 % is to

Finance Sector

Many international garment brands are made in

Tirupur factories in Tamilnadu in India.

From Surat in Gujarat, Diamonds are exported to

US and other countries

All these are few examples how India is goingto get affected


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Strategies To Deal With


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Survival strategies Revaluate your entire pricing structure.

Go bargain hunting.

Consider strategic investments. Monitor your cash flow.

Invest in sales and marketing technology.


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Survival strategies(Cont.)

Avoid Underutilisation of employees.

Be slow to hire and quick to fire new employees to

keep only the best. Talk to your bank and other sources of capital.

Think strategically!!!


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5 important survival rules that allow you to

profit even in recession Recession Survival Rule #1: Sit in an Exit

Row. (Invest for short duration)

Recession Survival Rule #2: Bet on Income.(Invest where you earn dividend)

Recession Survival Rule #3: Build in Safety.

(Bonds are safe game)


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Contd Recession Survival Rule #4: Think booze, bombs,

and butts. (Be it Sin stocks, gaming firms, or

defense contractors - stick with firms that have lower

debt, steady sales growth, and that are posting strong

earnings.)

Recession Survival Rule #5: Hedge Your Bets.

((ETFs) as the Rydex Inverse S&P 500 StrategyInverse Fund (RYURX), which is designed to rise in

value by 1% for every 1% the S&P 500 falls.)
http://finance.google.com/finance?q=ryurx&hl=en&meta=hl%3Denhttp://finance.google.com/finance?q=ryurx&hl=en&meta=hl%3Den


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Recession survival strategies for

business An Internet presence is crucial as Internet sales are likely

to see a significant increase due to rising fuel costs and a desireby consumers to consolidate excess travel spending.

Grow your business through acquisition because arecession is a good time to acquire property and assets at veryreasonable prices. Your investment is likely to increase and your

business can benefit from the growth and expansion.

Consider taking your business global because smallbusinesses can receive assistance from the U.S. government toexpand into foreign countries.


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Adapt to recession Project cash flow in advance and monitor budget

Pressurize debtors to pay up

Review overheads and improve cost efficiency

Review stock levels

Keep up to date with latest financial information

Think hard before incurring capital expenditure

Aggressively seek new business Be open to new ideas and accept them logically


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Analyse What you are doing?

Avoid taking bad business

Not accept business that cannot cover costs

Survival is more important than size Operate in lean and mean mode

Aggressively pursue debtors for payment

Look for talented unemployed people

Marketing assumes further importance.


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What will recession teach us?

What does not work?

Risk Management.

Profitability is important. Valuation is not.

Strong fundamentals win. Always!


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QUESTIONS

ARE

WELCOME


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ECONOMIC RECESSION IN INDIA & SURVIVAL STRATEGIES

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