IMPACT ON INDIAN INDUSTRIES SECTORAL ANALYSIS

RECESSION

RECESSION

A recession is a decline in a country's Gross Domestic Product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down.

STOCK MARKETS & RECESSION

The economy and the stock market are closely related. The stock markets reflect the buoyancy of the economy.

The Indian stock markets also crashed due to a slowdown in the US economy.

The Sensex crashed by nearly 13 per cent in just two trading sessions in January. The markets bounced back after the US Fed cut interest rates. However, stock prices are now at low ebb in India with little cheer coming to investors.

IMPACT OF A US RECESSION ON INDIA

A slowdown in the US economy, slowdowns the Indian economy.

Reports by Ministry of Labour say over 14,54,000 (6,54,000 in IT + 8,00,000 in Textile approximately) jobs were lost.

Worries for exporters(rupee strengthens against the dollar).

Bring down oil prices.

IT SECTOR

IT SECTOR The Indian index fell by almost 15%. The Indian IT and ITeS service hit harder as US is the

largest market for these services. The appreciation of rupee against dollar is set to hit hard

on Indian IT Sector, as The dealings are done in dollar and the payment is done in rupees, so they will get bit lesser than their expectations. This caused the huge layoff notice to employee by many big players of IT sector.

CONTINUE..

As the companies earning are affected by the appreciation of the money there is a decline in the remuneration of the employee working in the IT companies.

The Labour Department on 3rd April 2009 released a report, that a net total of 654,000 jobs were lost.

REAL ESTATE

REAL ESTATE

The development of real estate in India is attributed to the off-shoring and outsourcing businesses, such as high-end technology consultation, call centres and programming houses.

The huge amount of money was coming in terms of investment from non-resident Indians as well as private equity funds in a form of foreign direct investment(FDI).

CONTINUE..

Bankruptcy of Lehman Brother (one of the oldest financial firms of American market) and sell process of PE firm Merryl Lynch by the largest US bank, Bank of America, has created a very fast drops/recession in financial industry and created a crisis in all over US economy. Both of these firms were invested large amount funds into real estate sector.

This decreased the market rates by 10%-30% in metropolitan and upcoming cities in India.

MANUFACTURING SECTOR

CONTINUE..

As per the figures shown in the Index of Industrial Production(IIP) in the month of August 2008-09, the manufacturing sector has grown by a shockingly low 1.1%. The same sector had grown by 10.7% in 2007-08. It’s an indication that industries have been relying on existing projects only.

MANUFACTURING SECTOR

TEXTILE INDUSTRY

TEXTILE INDUSTRY

Approximately, 60% of the total garments manufactured in India are exported to foreign markets like EU, US, and Japan, generating revenue of up to US$ 52 billion.

During October 2008, as economic slowdown branched out, the total output of the textile sector came down by 10%.

An estimate states that during 2008, almost 8, 00,000 garment and textile employees had lost their jobs, which is one of the biggest employer about 88.02 million.

CONTINUE..

Some biggest apparel companies in India, which are mainly located in Ludhiana in Punjab generating employment for 4,00,000 jobs has suffered a 50% loss in sales; especially the exports during 2008. This has affected 20 to 30% of jobs.

Gujarat and Tamil Nadu are also moving in the same path as Punjab.

CONCLUSION

Increase in the unemployment. Shutdown of small scale industries. Decrease in the income from exports due to appreciation

of rupee. Decrease in the investment by foreign investors (FDI).