recession in india final

8/8/2019 Recession in India Final

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EFFECT OF RECESSION ONEFFECT OF RECESSION ON

INDIVIDUALSINDIVIDUALS

EFFECT OF RECESSION ONEFFECT OF RECESSION ON

INDIVIDUALSINDIVIDUALS

Presented byPresented by

C.SubbiahC.Subbiah


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WH AT IS RECESSIONWH AT IS RECESSION ??WH AT IS RECESSIONWH AT IS RECESSION ??A Recession is a contraction phase of the business cycle.

National Bureau of Economic Research (NBER) is theofficial agency in charge of declaring that the economy is in astate of recession.

They define recession as : significant decline in economicactivity lasting more than a few months, which is normally visiblein real GDP, real income, employment, industrial production, andwholesale-retail sales


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EFFEC TS O F R ECE SSIONEFFEC TS O F R ECE SSIONEFFEC TS O F R ECE SSIONEFFEC TS O F R ECE SSION

An economy typically expands for 6-10 years and tends to gointo a recession for about six months to 2 years .

A recession normally takes place when consumers looseconfidence in the growth of the economy and spend less.

This leads to a decreased demand for goods and services, whichin turn leads to a decrease in production, lay-offs and a sharprise in unemployment .


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Investors spend less as they fear stocks values will fall andthus stock markets fall on negative sentiment.


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CAUSES OFCAUSES OFRECESSIONRECESSIONCAUSES OFCAUSES OFRECESSIONRECESSION

Subprime mortgage crisis(home loan defaults)

Rising oil prices at $100 abarrel

H igh unemployment rates

A declining dollar value


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IMPACT ON INDIAIMPACT ON INDIA

A slowdown in the US economy is bad news for India because:

Indian companies have major outsourcing deals from the US

India's exports to the US have also grown substantially over the years.

Indian companies with big tickets deals in the US are seeingtheir profit margins shrinking .

IMPACT ON INDIAIMPACT ON INDIA

A slowdown in the US economy is bad news for India because:

Indian companies have major outsourcing deals from the US

India's exports to the US have also grown substantially over the years.

Indian companies with big tickets deals in the US are seeingtheir profit margins shrinking .


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Share MarketShare Market

More people have sold the shares in the indian share marketthan they bought in the recent weeks. This has added to the fallof sensex to lower points.

F oreign investors have pulled out from stock markets leading toheavy losses in stocks and mutual funds

Stock broking houses are laying-off people

Because of such uncertainty many people have started savingmoney in banks rather than investing

ECONOMIC DEPRESSIONECONOMIC DEPRESSIONIN INDIAIN INDIA


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IT and Real E state Sector IT and Real E state Sector

The key challenges faced by the industry now are inflation and

the psychological impact of the US crisis, leading the companiesto hit the panic button.

Bonuses, perks, lavish parties, and many other benefits aremissing as companies look to cut cost.

India's IT export growth is also slowering down

One of the casualties this time are real estate, where buildingprojects are half-done all over the country and in this tightliquidity situation developers find it difficult to raise finances


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Layoffs and UnemploymentLayoffs and Unemployment

Hundreds of workers have lost jobs in diamond jewellery,textiles and leather industry.

C ompanies in IT industry have stopped hiring and projectedlower manpower need.

F irms attached to the capital market are laying off people andlarge companies are putting their future expansion plans onhold.


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Industrial sector Industrial sector

Government and other private companies are reluctant instarting new ventures and starting new projects.

Projects that are halfway to completion, or companies thatare stuck with cash flow issues on businesses that are yet toreach break even, will run out of cash.

C ar, bike & truck sales down

Steel plants are cutting production

Hospitality and airlines are hit by poor demand


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Objective/ Methodology/ LimitationObjective/ Methodology/ LimitationOf TheOf The StudyStudyObjective:-

To survey the effects of recession on individualsTo analyze the survey and come out withsuggestions.

Methodology:-

Primary data was collected from interaction withindividuals from various industries.

Secondary data was collected from F inance related

books, journals and websites.


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Limitation:-

Due to time constraints the study was done byinteracting with individuals of a

BPO sector in Powai,

Bank employees in Powai,

C ertain other employees in Thane- Khopatarea.


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The work life of the BPO sector, IT sector, & other outsourcing companies are worst as compared to theIndian companies.

In India almost majority of the employees job are secureddue to less impact of recession in India.

Their current profession is affected in terms of promotion& sacking of bonus for current year.

In the current market situation majority of people wishesto secure their current pay.

About The StudyAbout The Study


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It sector & other foreign based companies are terribly hit by the recession.

The person who in invest for short term gains is mostaffected then the long term investor.

Almost all are able to meet their financial commitmentsexpect of few who are being laid off.

Many peoples personal life is affected due to the rising prices of essential commodities.

E veryone believes that the market will require another 2-3

years to recover from recession.


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JOB

JOB SECURITYSECURITY

Response No. of Employees

Yes 60

No 40


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Pressure of being Laid off

Pressure of being laidoff

No. of Employees

Yes 30

No 70


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In the current market situationIn the current market situation

what will you prefer to go for what will you prefer to go for

ResponseNo. of

Employees

Hike in salary 60

To secure thecurrent pay 30

To get in to any job 10

Ready for salary

cut 0


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Where will you prefer to work nowWhere will you prefer to work now

Table 4.1

Response No. of Employee s

Aboard 10

India 90


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BEAR MARKET

Response No. of Employees

Yes 80

No 20


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In the current market situation are you able to

meet your financial commitments

FinancialCommitments

No. of Employees

Yes 60

No 40


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C orrective Steps to C heck RecessionC orrective Steps to C heck RecessionC orrective Steps to C heck RecessionC orrective Steps to C heck Recession

RBI needs to neutralise the outflow of F II money byunwinding the market stabilisation securities that it had used

to sterilise the inflows when they happened.This will mean drawing down the dollar reserves which isimportant at this hour.In the IT sector, there should be correction in salary offerings

rather than job cuttingPublic should spend wisely and save moreTaxes including excise duty and custom duty should bereduced to lighten the adverse effect of economic crunch onvarious industries


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In real estate the builders should drop prices, so as to bring buyers back into the market.Also, the government should try and improve liquidity,whileC RR and S LR must be cut further Indian C ompanies have to adopt a multi-pronged strategy,which includes diversification of the export markets,improving internal efficiencies to maintain costcompetitiveness in a tight export market situation


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India is a strong domestic demand story, so anyslowing in the US is likely to have a more

muted impact on India.Strong growth in domestic consumption andsignificant spending on infrastructure are thetwo pillars of Indias growth story.

No sector has a dominant influence on earningsgrowth and risks to my estimate is limited.

C orporate India is also learning to master the artof efficient capital management, reduction in

costs and delivery of value-added services to

CONCLUSIONCONCLUSION


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CASE STUDYCASE STUDY

F ormer F inance Minister F ormer F inance Minister YashwantYashwant SinhaSinha::--

INDIA is currently facing two different kinds of crisison the economic front. The first is self-inflicted, andthe second of the world by the US.

1) Self-inflicted:-A number of steps to tighten liquidity, force

financial institutions to raise interest rates and not onlymake credit unavailable but also very expensive.

The rising prices of the demand-inelastic essentialcommodities would not respond to monetary measures

and that these steps would have an adverse impact on


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Thus, by its mistaken policies the government made mattersworse. Money became scarce, it became unaffordable, it had an

impact on demand, both consumer and investment, and theeconomy, as predicted, slowed down.

2) World by US:-

E conomic Advisory C ouncil to the PM felt that the mainglobal shocks for India would come from the sharp increase inthe prices of primary goods, particularly of crude petroleum andfood. The turbulence in the international financial markets wasconsidered to be just one among the many factors impacting onthe Indian economy.


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International financial institutions like the IM F also failedto anticipate the crisis.


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Steps Taken by RBI & GOVT.

The central bank even cut its benchmark repo rate by 150 basis points ( bps) to 7.5% on October 19 in an attempt to getsome of that money moving out of the bank vaults. Still nogo.

The problem also seems to be in the systems liquidityabsorption capacity. Whatever steps the government takes atthe moment such as, providing cheap cash to corporatethrough a variety of refinance windows

The government has tried addressing the issue by spendingon infrastructure and by cutting taxes to boost demand.


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BIBLIOGRAP H YBIBLIOGRAP H Y

http://www.commodityonline.com/hottopics/US-Recession.html

http://www.fibre2fashion.com/industry-article/9/877/impact-of-recession-in-americaneconomy-on-india1.asp

http://www.indiadaily.com/editorial/09-12f-04.asp

http://www.economywatch.com/world_economy/usa/indo-usa-trade-relation.html

http://www.thehindubusinessline.com/2008/12/31/stories/2008123151300500.html


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http://profit.ndtv.com/2008/11/01005242/IndoUS-trade-relations- What.html

http://www.thestandard.com/news/2008/03/20/five-reasons-why-recession-good-time-startcompany

PRINT MEDIA:-

The Economist TimesThe H indu

The Times of India

recession in india final

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