recession & india
TRANSCRIPT
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Recession and India
Presented By
Ajay Kumar Gupta
Roll No. 06, Sec. (A)
ICBM - SBE
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What is Recession ?
A Recession is a contraction phase of the business cycle.
National Bureau of Economic Research (NBER) is the official
agency in charge of declaring that the economy is in a state ofrecession.
They define recession as :
Significant decline in economic activity lasting more than a fewmonths, which is normally visible in real GDP, real income,
employment, industrial production, and wholesale-retail sales.
For this reason, the official designation of recession may not come
until afterwe are in a recession for six months or longer.
http://en.wikipedia.org/wiki/Business_cyclehttp://en.wikipedia.org/wiki/Business_cycle -
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What causes Recession?
An economy typically expands for 6-10 years and tends
to go into 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,
which in turn leads to a decrease in production, lay-offsand a sharp rise in unemployment.
Investors spend less as they fear stocks values will fall
and thus stock markets fall on negative sentiment.
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Crisis In The US
The United States entered 2008 during a
housing market correction, a subprime mortgage crisis
and a declining dollar value In February, 63,000 jobs were lost, a 5-year record.
In September, 159,000 jobs were lost, bringing the
monthly average to 84,000 per month from January toSeptember of 2008.
On September 5, 2008, the
United States Department of Labourissued a report
that its unemployment rate rose to 6.1%, the highest in
http://en.wikipedia.org/wiki/United_States_housing_market_correctionhttp://en.wikipedia.org/wiki/Subprime_mortgage_crisishttp://en.wikipedia.org/wiki/United_States_Department_of_Laborhttp://en.wikipedia.org/wiki/Unemployment_ratehttp://en.wikipedia.org/wiki/Unemployment_ratehttp://en.wikipedia.org/wiki/United_States_Department_of_Laborhttp://en.wikipedia.org/wiki/Subprime_mortgage_crisishttp://en.wikipedia.org/wiki/United_States_housing_market_correction -
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1.-Foreign Direct Investment(FDI)
Years % of GDP
2000-01 0.60
2001-02 0.85
2002-03 0.61
2003-04 0.44
2004-05 0.54
2005-06 0.69
2006-07 0.84
2007-08 1.32
Being 10th largest economy in the
World and 3rd in term of
PPP(Purchasing Power Parity), India
has emerged as a potential player forFDI & NRI investment.
$16 billion total amount of FDI that
came to India in 2006-2007 and $20
billion in 2007-08.
India provides highest returns on FDI
than any other country in the World.
India has a strong English language base for business ur oses .
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2.- ExportsIndia Years Export as % of
GDP
2000-01 9.68
2001-02 9.17
2002-03 10.39
2003-04 10.65
2004-05 11.92
2005-06 12.75
2006-07 13.79
2007-08 13.92
World bank Chief Economist
said that more jobs will be lost
in China than India because
India is less dependent onexports and he said also
emerging India is in much better
shape in comparison to other
emerging country.
Half a million jobs have been
lost in India and 20 million jobs
have been lost in China in lastuarter of 2008.
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3.- Consumption
Consumption accounts for just about 35% of GDP in China
while it constitutes about 65% of GDP in India.
India's huge population results in a per capita income of
$3,300 at PPP and $714 at nominal. India has a vast domestic market of 300 million strong
middle class population having a substantial purchasing
power and another 700 million people whose capacity to
purchase is gradually increasing.
Indian GDP growth rate will moderate from about 9% to
about 6% in 2008-09 while it is poised to crash from 13% to
6% in China. Thats why slow and steady is often better.
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4.- Sixth pay commission
Government has recently handed over a pay
hike that ranges from 40% to 100%.
Employees will get hundreds of thousands
of rupees as Arrears.
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5.- Welfare Schemes
National Rural Employment Guarantee Program
(NREGP) that provides 100 days of employment
to the poor people in rural areas.
6.- Interest RatesThe PLR rate is still more than 12% and its was
16% in mid 1990s.
More than 7% of average GDP growth rates of the
last decade come after high interest rates in India.
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8.- India Inc
Western scholars acknowledge that India holds the advantage
compared to China because of 2 reasons
2. Most successful India companies are private.
3. They have used capital for more productively and efficiently
than Chinese counterparts.
Most Indian companies are sitting on billions of dollars of
reserves.AMI(Access Market Information) said SME channel partners
expect 12-13% growth in 2009.
$6 millions for MSME programme to help Orissa unit by
UNIDO(United Industrial Development Organization)
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9.- Democracy
India is the largest democratic county in the world.
Thats why the psychological impact on Indian
consumers and investors has been for moresanguine than it has been in others countries.
Business pundits say that democratic govt. is better
than an authoritarian or autocratic one when it
comes to delivering high growth rates and
economic prosperity.
India 75th in Forbes best nations for business.
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References:
o Google search engine.
o McKinsey reports.
o World economic forum
o World social forum
o
Harvard business reviewo Accountancy magazine
o The Economists
04/04/09 15
Ajay Kumar Gupta
Give comment-
[email protected] or 9291592309
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