Recession

Mr. Krishnkant Naugaria

Recession By


This presentation covers all the aspect and the impacts of the recession on the globe and India as well, and the measures to

control for the same have been also mentioned.

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What is Recession???

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A recession is a business cycle contraction, It is a general slowdown in economic activity. Recession is the economy shrinking for two consecutive quarters (=6 months) with adecrease in the GDP (=Gross Domestic Product)

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There is a joke that economists quote to explain theDifference between “Recession & Depression”

RECESSION

= WHEN YOUR NEIGHBOR LOSES HIS JOB

DEPRESSION

= WHEN YOU LOSE YOUR JOB

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How to know recession?

Indicators to say a nation is in recession;

- People buying less stuff - Decrease in factory production - Growing unemployment - Slump in personal income - An unhealthy stock market

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Causes of recessions

- Currency Crisis- Energy Crisis- Under Consumption- Over Production- Financial Crisis

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Mr. Krishnkant Naugaria11/16/2013


StrengthsGood work force can be prepared by

recruiting skilled employee during the recession easily

Low cost work forceMistakes or the wrong decision can be

analyzedEnough time to maintain work life balance

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WeaknessesHousehold income decreasesBusiness profit decreasesBuying capacity decreasesDemotivation in people arisesLiving standard of people decrease which

tends to Unhealthy living environment Unhygienic and low grade edibles demand

increases

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OpportunityThe it can be splited into two categories : 1- Opportunities to publicGoods and services are available at lower

costSlash in the price of real estate Investment become easy

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2- Opportunities to organizationBureaucracy and politician becomes more co-

operativeThe efficient workers are able to survive in

the organization, these in turn leads to increment quality goods and services

The remunerations other expanses are decreased which in turn increases the saving

Policies become flexible

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ThreatsHigh unemployment & job cutting rateBankruptcies & black money circulation

increasesInflation increases & GDP decreasesCrime graph increases & research rate

decreasesProductivity decrease & dumping of product

increases

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Effect of recession on INDIA On the Negative side :The decrease in consumption in developed

countries, Indian export market could be hited

As the developed countries are the largest market for Indian IT exporters, so a weak global economy can land to dip in IT business

Both the import and export will be affected

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Cont.. On the Positive side :The decline in the commodity price & hence

easing of inflationary pressureSlash in the crude oil price will help in

bringing down the inflation. There may higher inflows of foreign

investors, this will lead to appreciation of rupee

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It is unhealthy for any nation to be in Recession. So, government will take certain countermeasures

to eliminate or reduce the effect of recession

How to come out of recession?

Government has 2 plans

Fiscal Policies(By Govt.)

Monetary Policies(By RBI)

Government influences the economy by changing howit (Government) spends and collects money

RBI manipulates the available supply of money in the country

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1] Tax cuts for businesses or for individuals

More moneyavailable forspending

Demand picksup; Market can recover;

2] Automatic fiscal policy; Unemployment Insurance

Some income tounemployed people to spend

Fiscal Policies

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1] Reduce reserve ratio

More moneyavailable for bankto give loans

Demand picksup; Market can recover;

3] Use its own reserved money to buy Govt. bonds

It becomes anincome to Govt.to inject moneyinto the market

MonetaryPolicies

2] Lower the interest rates

Individuals takemore loan

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SuggestionsPromoting people to purchase and invest in the

marketMore Spending by Government to create new

jobs Limiting productionAttractive policies for the people having cash

reserveCut down in labour sizeCutting down loan interests and promoting themOrganizing investors summit Bringing old closed public mills to the functioning

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Appreciation & Depreciation of RupeeAt first let us assume that in case, you go to a

bank and asks the bank that you intend to buy US$100, bank ask you to pay Rs 5400. Now after some time you go to bank,

Depreciation, you pay Rs 5500 means you have pay more to receive the same amount of US $.

Appreciation, you pay Rs 5440 means you have to pay less amount to buy the same amount of US $.

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Why we are able to stand in or after recession???

We have economics sizeable enough to matter on the global scale and are growing at a faster rate then the developed world.

Since the import from India is not so remarkable, hence any crisis in the west which leads to lower consumption in there would not be much adverse affect on India

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ConclusionThere is a panic among investors & they are

rushing to get out of risky assets like stocks.As the outcome of all these development the

demand for gold has increased.As gold is seen as a safe haven, its price has

risen to record high.The industries are sensitive to high interest

rate.The RBI & our Government is prepared for

any repercussion in the financial market

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RBI’s Power or Government’s Power is double-edged sword; Sometimes, their policies to recover from recession can be counter-productive and it may further worsen the situation.

Nation’s recession is controlled by the actions of everybody living in that country.

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ReferencesMoneycontrol.comEmployment newsMagazines Frontline OutlookNewspaper

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Mr. Krishnkant Naugaria11/16/2013

Recession

Economy & Finance

Transcript of Recession