GLOBAL MELTDOWNEFFECT ON H.R. &

HR SOLUTIONS TO COPE FINANCIAL CRISIS

BYSAKSHAM GAUR (A-19)

BBA + MBA (Dual)Guide- Ms. ROLI RAGHUWANSHI

Date- 26th july 2010

ACKNOWLEDGEMENTS

I would like to thank some very important people in this segment without whom this report would not have been possible. The first and fouremost in this list are all my teachers who are teaching me in Amity School of Business, all the knowledge which I have gained till now is because of them, their contribution cannot be overlooked in the formation of this project report. Secondly I would like to thank my faculty guide Ms. Roli Raghuvanshi, who cleared my doubts, guided me thoroughly throughout my research, corrected my mistakes when I committed them. Thank u mam. I would also like to thank my uncle Mr. D.K. Mishra -managing director of K.P.S. (a software company in rajasthan). His efforts in guiding me with my research were enormous.

Abstract:

Once in a lighter vein, the Management Guru Tom Peter joked, "if you want to insult an HR manager, ask him whether HR stands for human remains in the organization or not." Perhaps, this off- bit remark is one of the great challenges faced by HR managers today in the backdrop of growing uncertainties, regular and cyclical fluctuations in demand for organizational products or services. As the world economy has been, by and large, plagued by global economic meltdown; indeed, this creates from a broad perspective challenges and opportunities for HR professionals.

This paper attempts to highlight various issues and dimensions of HRM during the time when organization experiences market upheaval posed by recession.

CONTENTS

INTRODUCTION

OBJECTIVE & RESEARC METHODS

CHAPTER 1- BACKGROUND

CHAPTER 2- THE PRESENT SCENARIO

CHAPTER 3- BASIC OUTLINE OF THE PROBLEM

CHAPTER 4- H.R. SOLUTIONS TO COPE FINANCIAL CRISIS

CONCLUSION

WHAT TO DO AT THE CRITICAL PERIOD OF LAY-OFFS

REFERENCES

INTRODUCTION

The world has suddenly plummeted into a deep economic crisis (called Global Meltdown or Financial Tsunami), the worst ever since the 1930's. It has almost taken all the countries across the globe into its grip. Almost all

the sectors of economy with varying degrees have caught business by surprise during the current global downturn with so much swiftness that every day has become a question of survival. Organizations are grappling with low demand of their products, manufacturing plants are kept idling, export markets are dying, job markets are being annihilated everyday and the symptoms of slowdown are getting starker and starker with every passing day of downturn phenomena. 

The global crisis we are witnessing today is unique. Indian economy’s growth rate has fallen to 5.3 per cent in the third quarter (that ended in Dec.2008). Not only industry is showing signs of significant slow down and fatigue, but agricultural growth has also dipped by 2.2 per cent. Industrial growth fell to 2.4 per cent and manufacturing has fallen by 0.2 per cent. It has been admitted by the Finance Minister that the year 2007-8 has been the most challenging one in the last four years. First half of the year was quite impressive when the economy again recorded9.1 percent growth rate, but it was in the second half of the year that the effects of global slowdown began to reflect on the performance of Indian economy as well. Real signs of economic slow down were clearly visible in the month of February 2008 when the stock exchanges all over the country witnessed visible fall and the foreign investors began to withdraw their volatile stock holdings. World prices of crude oil, commodities and food-grains have risensharply after April 2007. Prices of iron ore, copper, lead, tin, urea, etc. are also on the rise. Global prices of wheat have almost doubled over the last one year. This has put pressure on the domestic prices of most the goods in the country. The challenge before the government is to keep the inflationary pressures under check and at the same time, not hamper the process of economic growth. Although the problem started with liquidity, it has now extended to many other areas. The main reason for this is neither lack of liquidity nor growth, it is a crisis of confidence. When there is a crisis of confidence, human resources have to be carefully handled. At a time when companies all over the world and in India are thinking for layoffs and retrenchment, some HR gurus are going off the beaten track. They are rather advising managements to use the downturn to find the talent who can take the organization to the next level. Thus human resources have tobe carefully handled. Keeping this factor in mind a study is made to know the problems and the solutions to cope with the financial crises.

OBJECTIVES

The objective of this report is to study the consequences of recession on the H.R. segment of industries and finding out the tools to cope with this financial crisis which has engulfed the whole world.

RESEARCH METHODOLOGY

This report is based on the secondary data provided by various magazines and management books and statistics issued by government bodies.

1

Chapter 1

BACKGROUND

Definition:

A recession is a decline in country's gross domestic product (GDP), in other words, it is a suspension of growth for a period of two or more consecutive quarters of a year. It simply means 'not so much cash in hands' to play with as before resulting in harsh measures like cost cutting, lay-offs etc. A recession normally takes place when consumers loose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment. Investors spend less as they fear stock values are likely to fall and thus stock markets fall on negative sentiment.

Recession in Developed Countries:

More than half of the world's economy has shrunken and among them USA- the citadel of capitalism and free market has suffered the worst. In the first ten months of 2008, there have been 1.2 million job losses in the USA and the economy has suffered heavily due to financial crisis resulting in global credit squeeze. "There is a real risk that millions will be thrown back into poverty." (Dominique Strauss- Khan, MD, IMF)

Source: IMF's GDP Growth Estimates for Major Economies(the figure shows that economy of developed countries is shrinking)

Recession in India:

In the beginning, the mandrians of Indian Economy were skeptical and unwilling to accept the effect of recession on Indian economy. But historically, slowdown in developed economy has affected emerging economy like India in two fronts: First, USA is India's largest trading

partner. Exports are showing the signs of flagging, customers have started canceling orders and payments are not made on time. Secondly, the financial linkage it has with India may take a severe turn because of prolonged recession. "A crisis of this magnitude is bound to affect our economy as it has. International credit has shrunk, with adverse effect on our companies and banks". (Dr Manmohan Singh, Prime Minister of India)

The road ahead: the Real Challenges:

The immediate challenge is how to bail out Indian Economy from further slips into a deep and long recession. Many stimulus packages are being announced by multicultural organizations to salvage economic slowdown, but, how far it will save us, the time will speak.  "We must accept that we are part and parcel of Global Economy. The global boom drove up our growth to 9% and the global slump has lowered it to 5%. We must abandon the illusion that we can somehow grow fast again while the rest of the world stagnates. We must learn to live with global downswings and rid out the storm. We can not end the storm on our own; we must patiently wait for it to subside. This crisis was not caused by us and can not be solved by us. Our role is to rid out the storm.

HR Functions at the Cross-Road:

Recession has brought an era of gloom and doom for HR and in the present scenario it is buzzing with terms such as lay-off, cost cutting, right-sizing and cash conservation and presently these are the defining terms.

Retrospection: Just a few years back……………………………………………………….

"People are the companies' greatest asset. It does not make any difference whether the product is cars or cosmetics" (Mary Kay Ash, Owner of Mary Kay Cosmetics.). HR is treated with much delicacy and care. They are more in demand in job market and the destinies of the companies are very much dependant on these people than any other resources. Over and above, there is also dearth of quality personnel in the job market. "The Human Resource Management sector is facing a huge talent crunch with only a handful of good human resource professionals being fashioned every year. There is a dire need to fill the gaps in the industries.12.8 million jobs are being generated every year during the 11th Five Year Plan of which the global benchmark depicts four HR professionals per 1000 employees. India needs 50,000 HR professionals every year". (Indian Management, Dec 2008)

They were lured with enviable pay packages and other benefits such as opening of cafeterias, gyms and even crèches to retain them and discourage attrition.

Chapter 2

The Present Scenario

The Era of Pink Slip:

Companies, world over, are frenzied with the object of cost saving/ cost conserving/ cost cutting by any means. The present economic downturn

has witnessed various HR practices across global companies.  "Employees in many selected industries have been experiencing salary cut; incentives and spending on corporate travel and conferences have been lowered; perks likes lunch vouches mobile phone allowances, stock options, fringe benefits, Diwali and New Year gifts budgets have been slashed by 60%." (Business India, Feb 8, 09.)

Salary Cut:

Salaries have been slashed. Highly paid employees have been asked to agree on a voluntary cut as in the cases of Motorola and Jet Airways. Bonuses are significantly frozen. Even 15 out of 20 AIG companies have frozen compensation levels and increment. There has been the return on variable pay which the financial service sector has been increasingly using. Jet Airways has slashed salaries of its top key executives by 25%. Pilots and engineers earning 10 lakhs per month would have to experience a pay cut of 20% where as chief executive and operational heads would experience 25 % pay cut. The company has also decided to freeze all sorts of allowances to trainee pilots, though the pilots who come below Rs.75, 000 per month salary bracket have been left out.

Production Cut:

Indian manufacturing sector has no less been affected by economic downturn. In many cases, companies have trimmed production by reducing the number of working days to three to five days a week. Hyundai India (by 25%), GM India (by 10%), Maruti Suzuki (by 6.3%), Toyata India (by 30%), Madras Almunium Co. have all cut back capacity of production while some companies have shut plants or mills completely. Around 50% of 4000 ginning mills in India (mostly the Punjab, Maharastra, Gujarat, and Andhra Pradesh) have closed their shutter completely. The survey conducted by FICCI on the impact of slow down on the Indian manufacturing sector that textiles, metal products machinery and equipments, leather and chemicals etc, have planned cuts in their production ranging from 10% to 50% for the period November 2008 to March 09

Budgetary Cut:

Companies across the globe have also tightened their belt by resorting to budgetary cuts. Reliance Industries Ltd. has launched "Mission Kurukshetra" to optimize costs across all its major industrial operations. Infosys, Wipro Technology and TCS Ltd. have also economized through the

reduction of power consumption, cutting travel and postponement of capital expenditure. NDTV India has also cut major rationalization costs. In many MNCs, international trips- be it short or long term- have been clamped. To overcome the on going economic turbulence, Airport Authority of India has restricted the officers on an austerity measure not to go on foreign tours more than four times in a year.

Job Cut:

All these cut being practiced across companies of the world have its percussion on HRM. Relatively slow economic activities, threats of job cuts and salary freezes have shifted the balance of power at the workplace back to employers. And a much-needed rewriting of workplace practices is under way at India Inc. The balance of power in the workplace has surely shifted away from employees back to the employers. And it is not just the now seemingly 'unnecessary' HR excesses of the boom years — recall 'no-shows', 'talent crunch', 'counter offers', 'family holidays', 'dating bonuses' and the like are being consigned to the dustbins even at relatively financial healthy companies. Job cut is the most difficult and perhaps the most critical but inevitable among the frugality measures taken by companies across the world, particularly in India.

The global financial meltdown has taken its toll on the job markets across the globe.

Organizations Considering Lay-Off, Asia Pacific & US:

Source: Hewilitt Survey- 2008-09

General Motors, the US car maker has asked 1600 of its US employees to leave by 1 May 2009. Fiat, the Italian car maker said it cut 4,600 jobs at its US subsidiary CNH, a construction equipment maker. As per ILO, 23 millions of people are expected to loose their jobs in Asia. (Business World- 4 May.2009) At every level from the unskilled contract workers to architect, jobs are being cut." (Kumar Gera, Chairman Confederation of Real Estate and Developers Association of India.).

Slumps have also affected manufacturing sector, which is the second largest employer and heavy commercial vehicles are also in the same boat. Laying-off is also taking place in small and medium sized companies and unorganized sector which employ 150 million people or 30 % of our workforce in industries such as Power looms, Engineering, Mines, Transport and community and personnel services. These situations have already created lot of economic, psychological and sociological problems in the country (Business World, 3 Nov. 2008)

Aftermath of Job-Cut:

Confederation of Indian Industry says, the labor intensive leather industry, which employs 2.5 millions of people, has not only frozen requirements

but warns of further 5 lakhs job cuts. Indians export sector which contributes about 20% of the country's GDP has been worst hit. The survey reports prepared by Federation of Indian Export Organization (FIEO), at least 10 million people will be out of jobs.

Call it cut or simply asking poor-performers to go, lay-offs in Indian IT industry are being triggered out mostly by mid-sized firms and haven't attained alarming proportions yet. "The growth rates have dipped but are not negative. As per their future guidance, big IT firms still need people as the project pipeline hasn't completely dried up. People needs will be muted but not non-existent." (Frost & Sullivan, ET Bureau, 21.Nov 2008)

Believe or Not- Organization still Hiring:

Some companies in selected sectors like insurance, Hospitality, Telecom, Pharmaceutical and Technology are still looking people across functions.

Bharati AXA Life plans to add another 4000 employees to its pay- roll of 9000 employees. "We expect, Indian growth story to continue and this is the right time to invest in manpower." (Moon B. Shin, MD, LG Electronics)

BPO sector will also witness addition of some new employees in the areas of finance and accounting profession with a year or a few more years of experience and also there is spurt of legal processing outsourcing.

In private security business, there is a huge demand for security personnel and it is estimated about 2, 00,000 security professionals are required at industrial installation in the next two years

Recession has not clouded hiring plan of TCS despite its rigorous job cuts. It has made 24,789 technical campus offers for 2009-10, a 13% increase over its intake of 22,000 for the current fiscal. Its closest rival, Infosys Technologies, will be making around 20,000 offers, an 18% increase. However, No.3 Wipro is lowering the number of campus hires to 8,000 from 14,000.

Survival Tools:

"If we had no winter, the spring would not be so pleasant, if we didn't sometimes taste adversity, prosperity would not be so

welcome." (Anne Dudley Bradstreet). Every lightening has a silver lining which means every problem is also an opportunity in disguise. Obviously, recession makes us feel defensive. The HR manager has to think and rethink many times as to what are the tools to be used at this testing time s of slow down.

Organizational Tool:

* Lay-off is not the only alternative to manage surplus workforce during economic slowdown. Examine other ways of cost cutting like freezing benefits etc. Lay-off may be the last resort. * It is better to look for outplacement opportunity for the surplus employees to maintain positive image of the company in the job market.* Assure the laid-off employees that when economy shows the sign of upturn, first preference will be given to them* Be humane and counsel the surcharged laid-off employees and let them all be aware of the critical situation and compromise on certain economic aspects. * Redirect Your Employees to Other Departments (Job Rotation)* Keep communication open between management and employees as both are in tough times.* Render the feeling that it is better to swim and sink together- all cuts should start from the top to the bottom: "Examples are better than percept"* Introduce flexi-time in the work place, encourage employees working from remote locations: "Results matter more than physical presence"* Help out of the way- to keep them engaged in Training , EDP, sabbatical education, may be full-time MBA, short time programs or On-line courses* Have lots of fun at the workplace to relax the mood as the current slowdown has induced a great amount of anxiety and fear among the employees: "Humor is the greatest stress buster." It is time to bond better and develop camaraderie among people and spread the words of enthusiasm and happiness and suppress thoughts of pessimism and sorrows.* Reinvent policies so that employees feel wanted and that will improve employees loyalty

Tools for Employees

* Have a positive frame of mind, make a self assessment and introspect: "Am I update and do I have upgraded my employability skill?"* Think what value "I can add to the task/ organization?"* Acquire new skills, be multi skilled and have cross functional exposure.* A great time to reinvent self, have great time with family at movie

theatre, restaurant, shopping malls and exhibition.* Network tactfully, and establish valuable rapport.* Do physical exercise, practice Yoga and Pranayam.* Spend more time with positive people and read inspiring books on personality development.

Chapter 3

Basic Outline Of The Problem

Joblessness in India:

A recession is a period of reduced economic activity. The current US financial crisis has had quite an impact on India as well. According to Sonal Agrawal, CEO of Accord Group India, “Companies are squeezing all assets including human assets.”Situation of New Jobs GeneratedNew Jobs Generated- 9.7 LAKHin 2006-07New Jobs Generated 6.7 LAKHin 2007-08Situation of Jobs LostJobs Lost in 2008-9- Estimates VaryFrom 5 To 20 LakhJob Losses in Estimated BetweenJan-March 2009 80,000 & 1,00,000Source : Business Today

Trends In Average Employment, India (Millions):

Period Average Employment (millions)

Percentage (decline)

September 08 16.2 -October 08 16 - 1.21November 08 15.9 - 0.74December 08 15.7 - 1.12Avg monthly - - 1.01changeSource: Labour Bureau, Ministry of Labour and Employment

Unemployment in India’s industrial and services sector is on the rise. According to the survey conducted by the Labour Bureau, the total employment is estimated to have declined from 16.2 million during Sep. 2008 to 15.7 million during Dec. 2008, implying a job loss of about half a million. The employment fell in every month after Sep. 2008 at an average rate of 1.01 percent a month. It is difficult to say in the absence of primary or even secondary data that where are the biggest layoffs happening? Retail, Construction, Sections of financial sector and media and entertainment are the areas where staff reductions are the most acute. IT companies, Engineering firms and Export-oriented industries

such as textiles, pharmaceuticals and automotive components are all likely to feel pressure. The Indian IT industry has witnessed a slowdown of approximately 40 percent in recruiting new people.

Percentage Job Loss In Different Industries(Oct.-Dec.’08)

Industry Direct Contract Total

Gems & jewelery

- 9.27 - 3.86 - 8.58

Transport 1.96 - 9.93 - 4.03Automobile - 0.77 - 12.37 - 2.42Metals - 1.04 - 4.53 - 1.91Textiles - 1.11 4.6 - 0.91

Joblessness on Other Countries:

The US Bureau of Labour Statistics data reveals that unemployment among Asians in the US has doubled in the last Four months. Data reveals that for the month of Jan. 2009 the unemployment rate for Asians was shown as relatively low, at 6.2 percent as of Dec. 2008. The unemployment rate among Asians rose from a mere 3.2 percent in Oct. 2008 to 6.2 percent in Dec. – a loss of 2,04,000 jobs across sector.

In manufacturing sector, employment fell by 2,07,000 in Jan., the largest one-month decline since Oct. 1982. The much – hyped financial services sector, too, lost 42,000 jobs in Jan. bringing its total to 3,88,000 cuts since the end of 2007. The numbers are worrying especially since a large number of Indians work in the financial services, manufacturing and IT sectors in the US. The only piece of good news came from the healthcare sector ( where many Indian doctors, paramedic staff and nursing staff areemployed) where 19,000 new jobs were created in Jan. overall though, it’s definitely not the best time to be working in the US.

LAYOFFS IN PERCENTAGE IN VARIOUS COUNTRIES

COUNTRIES LAY OFFS (in percent)U.S.A 55CHINA 30.6JAPAN 17

SINGAPORE 15INDIA 12.6

Chapter 4

H.R. Solutions to Cope With Financial Crisis

About the Solution Management of Leader Companies

There are some companies that have succeeded in taking off at a time when industrial growth is slowing down, exports are coming crashing down, investments are decelerating and consumption is moderating. Corporate like Bharti Airtel, Larsen and Toubro and Hero Honda are all leaders in their sectors. They are also the only companies in their sectors that have been notching smart growth even as their rival flounders.

According to the survey conducted by the Business Today, the major steps/ strategies adopted by the leader companies to fight the downturn are given below –

1. LARSEN & TOUBROBusiness: Engineering and Construction (Bridges,Roads & World-Class Plants)Stratiges adopted to Fight Downturnl A strong order book of Rs. 68,800 crore as ofDec. 2008l Unmatched expertise in executing large projectsl No major cancellation or delays of orders fromclientsA low debt – equity Ratio

2. BHARTI AIRTELBusiness: Mobile OperatorStratiges adopted to Fight Downturnl Expanding beyond mobility-long distanceconnectivity, besides DTH and IPTVl Growing presence in rural India drivingsubscriber growthl Well thought-out network expansion planA low debt – equity Ratio

3. SUN PHARMABusiness: DrugsStratiges adopted to Fight Downturnl Focusing on the Indian branded prescriptionsegment as well as on export of branded drugsl Carved a niche in US genericsl Spend of 8-9 percent of sales on R&D is payingrich dividendsAcquiring loss-making drug companies andturning them around

4. SIMPLEX INFRASTRUCTUREBusiness: Infrastructure and ConstructionStratiges adopted to Fight Downturnl Diversifications wit in construction have helpedit de-riskl Has moved into new geographies like West Asial Has stayed away from higher risk BOT projectsOwn machines and equipments make for betterprofit margins

5. ALL CARGOBusiness: Cargo & Container handlingStratiges adopted to Fight Downturnl Minimal exposure to the USl Low debt & healthy cash pile helps it in buyoutsl Branches into equipment leasingRestructured international acquisition toAdvantage

6. AIA ENGINEERINGBusiness: High tech niche engineering segment &make parts for coal grinding used in power plants,cement & mining industryStratiges adopted to Fight Downturnl High entry barrier in the area it operatesl Its products for replacement market arerecession-proofl Diversified customer baseLow debts on the books

7. HERO HONDABusiness: Two-wheeler manufacturingStratiges adopted to Fight Downturnl Building a wide product range across segmentsl Differentiated brand-building campaignsl Launching new modelsFocus on driving sales in rural India

Growth Chart of Different Companies

NAME OF THE COMPANY

PAT GROWTH (%) Sept. YOY

PAT GROWTH (%) Dec. YOY

Larsen & turbo 32.2 25.3Bharti airtel 26.8 25.4Sun pharma 134.2 28.6Simplex infra 47.1 14.8All cargo logistics

270.5 128.8

AIA engineering

62.9 16.5

Everest kanto 52.1 29.7Opto circuits 104 47.3Hero Honda 49.9 9.2Mundra port NA 92.4Source: Business Today* PAT – Profit After Tax* YOY – Year Over Year

Suggestions/ Solutions to cope with the crisis

Cost Cutting:There are indeed many ways of cutting costs than shedding labour. For example, some of the reasons for slow profit growth include the rise in production costs, a heavier interest payment burden and lower price

realization in global commodities and export markets. With lower cost of power, transportation and finance and with a rise in world commodity prices, profit margins of most companies, especially those engaged in exports would improve.

Salary Cutting:When companies are trying to cut costs, the biggest temptation is to lay off workers. Finance Minister Mr. Pranab Mukherjee has advised industrialists not to retrench workers but to go for salary cuts. Many European workers willingly accept lower wages in lieu of a big severance pay when they are laid off. Infosys has asked its staff to take a years’ leave from their jobs in order to work for an NGO. During this time, they will earn half their salary, thereby saving the company some money. Jet Airways has started laying off its staff and has in particular, retrenched its non-Indian staff. Besides a good number of senior management personnel are in for a huge reduction in salary.

Price Cutting:The Former Finance Minister Mr. P. Chidambram advised companies (while giving away the Annual National Tourism Awards) to cut price to weather the downturn. He said, “Businessmen should not be hesitant in cutting prices. It is more important to remain in business and retain clientele. Cutting price is also better than losing loyal employees and business. Cut prices and the results would be visible.”

Employees State Insurance Scheme(Begun In Jan. 2005):Workers could be benefited when they could be brought under the Employees’ State Insurance Scheme, which started in Jan.2005. They can get monthly payment under this scheme. Unfortunately, the coverage of the scheme is rather small (around 78 lakh employees).

Increase Training Facility:Retrenched labour will have to be trained by the government because there are still some industries that are doing well and showing relatively high profit growth. There could be fresh recruitment in such industries in the future and retaining will ensure that the fired workers get new jobs. On this front more needs to be done.

Lower Interest Rate:Rising interest rate payment is a great burden on companies in the slowdown. Chinas’ infrastructure superiority and lower interest rates are

enabling it to corner large orders during the current global slowdown as compared to India. Action has been taken by the Reserve Bank by announcing the measures that would release over Rs. 3,88,000 crore in the system. There is much hope that the centralbank would lower the repo rate (the rate at which it lends to banks) by up to 100 points or 1 per cent in the next few weeks. The RBI has already lowered the repo rate by 350 basis points (3.5 percent) so far while the reverse repo rate, (the rate at which banks park surplus funds with the central bank) has been reduced by 200 basis points or 2 percentage points. In addition, the cash reserve ratio (the proportion of deposits that banks keep in cash), has been reduced by 400 basis points or 4 per cent, resulting in an injection of Rs. 1,60,000 crore into the system. Private and foreign banks have already responded by lowering the lending rates by around 50 (0.5per cent) basis points while public sector banks have cut their benchmark prime lending rates by 150 to 200 basis points. Both the government and RBI have been prodding banks to cut rates further to boost economic activities. High interest rates can be justified only on grounds of rising inflationary pressure. India’s inflation rate has rapidly come down due to slackness in demand and falling prices of crude oil.

Reduction of Foreign Loans to Stabilizethe Value of Rupee:Among the reasons why one in three corporations is facing the red alert today is the high cost of servicing their foreign loans. Some time back, the government eases the external commercial borrowing norms with great fanfare. This gave Indian companies easy access to cheap loans from abroad. This measure was aimed at easing the tight liquidity situation prevailing in India, but ever since the rupee has been depreciating against the dollar, servicing these loans has become very expensive. Some think that “translation losses” on foreign currency loans stand at Rs. 26,399 crore in the first nine months of this financial year. It comprises 65 per cent of the net profit decline witnessed by the companies in trouble. To reverse this trend, stabilization of the rupee is called for.

Tax Cutting:Since one of the main reasons behind the decline in the corporate sector’s profit is slack consumerdemand. The Finance Minister announced small cuts (2 per cent) in indirect taxes like the service tax and excise duties will have atleast a psychological impact on peoples’ spending propensities, specially when the tax cut is passed on to consumers by producers. It may help in reviving up demand, but the tax cut is too small to make a big difference to sagging sectors. The Finance Minister has obviously been constrained by the bloated fiscal deficit, which, though it is around 6 per cent, adds up to 13 per cent when the states’ deficits are also added. The new tax cuts will add Rs. 30,000 crore to the government’s expenditures. It is indeed going to be tough to boost domestic demand when job cuts

have already started. People hold on to their money and postpone buying unless there are big bargains in sight.

Govt. Aid To Increase Expenditure OnInfrastructure:The government should give indirect help to the industrial and services sectors by increasing expenditure on infrastructure. This the Finance Minister has already done in the interim budget, and various social sector schemes like education and child welfare, have also received a boost that will act as a cushion against the income loss and children dropping out of schools.

National Rural Employment GuaranteeScheme:The national rural employment guarantee scheme has been enhanced and some relief will be offered to the rural jobless. The budget estimates that the NREGC delivered 13.88 million person-days of additional employment in 2008-09. At the end, it is hard to say that global meltdown has not affected the Indian economy. These are just the tip of the iceberg crisis and it remains to be seen what more India will see. The question is how India can withstand the crisis. All in all, what has been done so far is only a stop – gap arrangements. HR gurus have to devise more ways of boosting the economy.

CONCLUSION

Ups and downs are the basic nature of a country's economy as well as organization. It must be remembered that there is always light at the end of the tunnel. Even though the road towards the tunnel may not be devoid of roadblocks, nevertheless, a little bit of optimism can make all the difference. Time will come when black cloud hovering over Indian Economy will be cleared and there will be sun shine every where, that is perhaps what P.B Shelly in his master piece, Ode to West Wind, meant when he said: "If winter comes, can spring be far behind?" No matter how big the problem is, no problem is insurmountable.

Ways to Effectively Control Recession Effects on HR PerformanceMost organizations will wonder, for instance, how to control recession effects on HR performance, and employee performance in general. For the most part, this would fall to the efforts of the human resource department. In fact, the HR department would probably need to handle the most important part of the recession coping strategies.

This is because, essentially, what crises force organizations to do is to go back to the basics and try to maintain an intact, dynamic core. This core consists mainly of the organization’s leaders and employees – all united towards accomplishing their mission and achieving their vision. The panic and worrying induced by uncertain, or worse, poor economic conditions will tend to obscure this simple fact, but human resource departments should strive to realize this, better sooner than later. The sooner HR is convinced of its central role in surviving the crisis, the sooner planning and implementation could start as well.

Drops in sales and profits will inevitably lead management to consider laying off employees, especially the poor performers. While this may be necessary in a lot of cases, it should also be realized that this often has unintended consequences. This is manifested in the loss of productivity caused by layoffs, however small, as other employees suddenly feel less secure in their own jobs. Another effect may be lowered morale, since those who were laid off were friends and close colleagues of those who remain in the organization. The best thing to do to try and lessen these side effects would be to maintain open channels of communication among the management, human resources, and the employees. They should be able to ask questions and get straight, honest answers. This will, in the long run, lead to a better understanding amongst the different parts of the organization, which is crucial for long-term survival.

HR should also do the best they can with the employees and resources available, in terms of training programs. While recessions are usually seen as periods where organizations should do all they can to just stay afloat, it would not do to neglect the future for the present. That is, training budgets are often cut mercilessly during tougher times, with the rationale that they give no immediate payoff. However, companies that follow this policy too closely may find themselves unprepared to cope with the changed situation once the crisis has passed. Strategies should be made looking at the long term, and not just the short term, no matter how tragic the short term may seem to be.

HR departments truly do have their jobs cut out for them in times of crisis, but with a smart and sensible plan, managers can effectively control recession effects on HR performance.

What to do at the critical period of recession and lay offs

It is not important to know what is happening across the world but it is important to know what is happening in your company. It is also important to keep an eye on the market situation and keep yourself updated with the latest. If you are the one who has been laid-of, then you also need to take the blame of your current situation. However, there is no need to get panic. Hold your emotions and look around. 

If you are the one who has been laid-off then you must do the following:

1) Time with family. Remember when you were working and working for 12-15 hours a day, how difficult it was for you to find some time for your family. Now is your time to be with your family. Spend some time with them. Strengthen your bond with them. 2) Improve your skills and personality. No one is perfect and there is a scope for improvement in everyone of us. Use this time to work on your

areas of improvement and weaknesses. Sharpen your skills. 3) Work on your professional and personal network. Networking is very important for the growth of an individual. Use this time to build and strengthen your professional and personal network, so that whenever the market situation improves, you get the benefit of it. 4) Heading back to schools, colleges and institutes. This is also a good time for you to share your knowledge and experiences with new generation and to pass on your intellectual legacy to them. Get associated with some colleges and institutes to do so. There is a possibility that you might get paid for it, which in turn might give you the required financial support. 

These are some of the ways you can spend your time during this phase. 

Good time and bad time will always be there but when we pass through the good phase of our life we forget to prepare for the bad time. We get carried away. We do not plan for our future and difficult times lying ahead and crisis and adversities are part and parcel of our life that we cannot run-away from. Recession of one such crisis and we need to prepare our selves for all such adversities. We can do it in a following way:

1) Save generously and invest wisely. In such crisis, nothing but only your savings in the bank can save you. More the savings that you might have lesser will be your pain. It is also important for you to invest wisely. The higher the risk the higher will be the gain and more higher will be the loss. Hence, one needs to think about it. 

2) Both husband and wife should be working. In some conservative families, even in this 21st century, only males are allowed to work. But I think if both husband and wife works that also lessens the pain. If one person looses the job, the other will have and hence the money will still come in. 

3) Keep updating your existing skills all the time and acquiring new skills. Don’t take anything for guaranteed. Learn and relearn. Keep the sword of your skills sharpen, all the time. Learn new things and that can help in your professional growth. 

4) Have a hobby that can also be transformed into a profession. We all should have some hobbies. To do things in our spare time that we are passionate about. Painting, dancing, music, writing, acting and etc are some hobbies that can also be transformed as a profession, if required. 

Now, these are few things that might help you to overcome any type of economic recession or crisis in your life. 

REFERENCES

1. Rishi Joshi, “Employee’s market, still”, Business Today, May 4 2008, (P 78.)

2. Saumya Bhattacharya, “Job Loss Are you Next?” , Business Today, March 8, 2008,

(Pp 42 – 48.)

3. Cover story : “Atlas shivered”, Outlook, 27 Oct, 2008, pp 44-55

4. Ashish kumar sen, “Severence packaged”, Outlook, 27 Oct, 2008, P 56.

5. Satyanarayana.G and Y.Kesava Reddy, “Global financial crisis and Indian economy”,

Southern economist, July 15, 2009, pp 31 – 32.

6. Anitha Selvaraj, “Global financial crisis: Its impact on Indian economy”, Southern

economist, May 15, 2009 pp 5- 8.

7. Mahalingam T.V., “Managing the slow down: IT services, people power”, Business

Today Oct 5 2008, p 68.

8. Venkitaraman.S, “Global financial crisis: Reflections on its impact in India”, The

Hindu Online edition, Oct 18, 2008

9. Mohit Sharma, “Recession takes 2 lives as job market shrinks”, Indian

express.com, Feb 17, 2009.

10. Mansi goyal, “BPO firms hit by US financial crisis”, The Times of India, Oct 1, 2008.

11. Sreekala.G and Sai Deepika Amirapu, “IT Companies raise referral bonus amid

crisis”, The Economic times, Dec16, 2008.

12. Vinay pandey, “Hurt labour intensive sectors pull down sentiment as well”, The

Economic times, Dec 5, 2008

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