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8/6/2019 Impact of Recession on India & Industry
http://slidepdf.com/reader/full/impact-of-recession-on-india-industry 1/18
IMPACT OF RECESSION ON INDIA & INDUSTRY IMPACT OF RECESSION ON INDIA & INDUSTRY
Presented By:
Darshan Shah
WRS017132
8/6/2019 Impact of Recession on India & Industry
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What
Is
Recession?
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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´.
8/6/2019 Impact of Recession on India & Industry
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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.
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WHEN YOUR
NEIGHBOR
LOSES HIS JOB
WHEN YOU
LOSE YOUR JOB
Difference Between Recession & DepressionDifference Between Recession & Depression
Recession Depression
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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
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ImpactOf
Recession:
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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:
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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.
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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.
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How To Know Recession?
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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
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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
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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
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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.
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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.
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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?