PRESENTED BY

JACOB TOMS
 INTRODUCTION

In economics, a recession is a business cycle

contraction.
It is a general slowdown in economic activity.
Recession loomed over United States
Recessions generally occur when there is a
widespread drop in spending (an adverse
demand shock).
This may be triggered by various events, such as a
financial crisis, an external trade shock
Governments usually respond to recessions by adopting
expansionary macroeconomic policies, such as
increasing money supply,
increasing government spending and decreasing taxatio
n
.
Macroeconomic indicators such as GDP (gross domestic
product), investment spending, capacity utilization,
household income, business profits, and inflation fall,
while bankruptcies and the unemployment rate rise.
Investors spend less as they are fear stock value will
fall and thus stock market fall on negative
A recession has many attributes that can occur
simultaneously and includes declines in component
measures of economic activity (GDP) such as
consumption, investment, government spending, and
net export activity
These summary measures reflect underlying drivers
such as employment levels and skills, household
savings rates, corporate investment decisions, interest
rates, demographics, and government policies.
A severe (GDP down by 10%) or prolonged (three or four
years) recession is referred to as aneconomic depression
, although some argue that their causes and cures can be
different. As an informal short hand, economists
sometimes refer to differentrecession shapes, such as
V-shaped,U-shaped,L-shapedandW-shapedrecessions.
Consumer confidence is one measure used to evaluate
economic sentiment.
 TYPE OF RECESSION OR SHAPE

The type and shape of recessions are distinctive.

In the US, V-shaped, or short-and-sharp
contractions followed by rapid and sustained
recovery, occurred in 1954 and 199091 U-shaped
(prolonged slump) in 197475, and W-shaped, or
double-dip recessionsin 1949 and 198082.
 Korea, Hong Kong and South-east Asia experienced U-
shaped recessions in 199798, although Thailands
eight consecutive quarters of decline should be termed
L-shaped
Japans 199394 recession was U-shaped and its 8-out-
of-9 quarters of contraction in 199799 can be
described as L-shaped
 PSYCHOLOGICAL ASPECTS

Recessions have psychological and confidence aspects.

For example, if companies expect economic activity to
slow, they may reduce employment levels and save
money rather than invest. Such expectations can
create a self-reinforcing downward cycle, bringing
about or worsening a recession
 WHAT CAUSES RECESSION?

Many factors contribute to an economy's fall into a

recession, but the major cause isinflation.
Inflation refers to a general rise in the prices of goods
and services over a period of time.
Inflation can happen for reasons as varied as increased
production costs, higher energy costs and national debt.
 In an inflationary environment, people tend to cut
out leisure spending, reduce overall spending and
begin to save more.
But as individuals and businesses curtail
expenditures in an effort to trim costs, this causes
GDP to decline.
Unemployment rates rise because companies lay off
workers to cut costs. It is these combined factors
that cause the economy to fall into a recession.
This lead to a decreased demand for goods and
services
 IMPACT OF RECESSION IN INDIA
1. Reduced liquidity in the Indian economy
2. Reduced industrial output
3. Reduced job opportunities
4. Stock Market is lingering in the bottom
5. Real estate market has started to take a beating
6. Inflation has increased
7. GDP has come down and the GPD forecast for the
next two quarters are only average.
8. Change in consumer behaviors and purchasing
power.
 CAUSES OF RECESSION
Currency Crisis
Energy Crisis
War
Under Consumption
Over Production
Price Of Fuels
AFFECTS OF RECESSION ON INDIAN
BUSINESS
The sectors least affected directly by the slowdown are
Pharmaceuticals , Oil and Gas, FMCG, Media & Entertainment
Those which feel a moderate impact of the global crisis are
Power, Automobiles, Retail, Hospitality and Tourism
The sectors most severely affected are Banks, Financial
Services, Real Estate, Infrastructure and Information
Technology
 MAJOR SECTORS AFFECTED BY
RECESSION
Indian Stock Market
IT and BPO
Banking
Real Estate
Aviation
Textile
Automobile
Hospitality
 EFFECT OF RECESSION ON DIFFERENT
SECTORS OF THE COUNTRY
#SHARE MARKET

Most people have sold the shares

Foreign investors have pulled out from
stock market
The Indian stock market also crashed due
to the slowdown in the U.S economy
People choose saving money rather than
investing them in stock market
 #INFORMATION TECHNOLOGY
INDUSTRY

Recruitment by IT Companies at IIT

Kanpur has gone down from 130 students
in 2007 and 72 in 2008
IT Companies are predicted a drop in 15%
in growth from 30% in BPO Sector
Indias outsourcing industry slowed down
 #REAL ESTATE SECTOR
One of the casualties during this time was
real estate, building projects were half
done all over the countries and in this
tight liquidity developers find it difficult to
raise finance
The demand for houses had reduced
significantly and the property price across
India has registered 15-20% fall
 #INDUSTRIAL SECTOR
Govt and other private companies are reluctant in
starting new ventures and starting new projects
Project were half way to complete or companies got
stuck with cash flow were
unable to reach beak even, and were running out of
cash
As very less new production were taking place this lead
to loss of export details and created unemployment
 #BANKING SECTOR
As companies were in loss many banks
suffered crisis in recovering loans which in
turn had an adverse effect on economy and
also created liquidity crunch
Central banks have worked to improve
liquidity but were charging higher credit. The
interest rates have drastically increased from
11.5% to nearly about 16%
Banks act as important players in the
 AUTOMOBILE INDUSTRY

India is the worlds largest two wheeler manufacturer.

India is the worlds second largest tractor manufacturer.
India has the fourth largest car market in Asia.
India has the worlds largest three wheeler market.
India is the fourth largest Automobile exporter in the world
 EFFECT ON AUTOMOBILE
INDUSTRY

TATA MOTORS
MARUTI SUZUKI
MAHINDRA &MAHINDRA
 EFFECT OF RECESSION

Uncertain exchange rate and a sudden increase in

dollar value against Indian Rupee
Delayed Payments from the OEMs (Original
Equipment Manufacturer)
Alloy and Steel prices have also not shown any
reduction in their prices
 EXPORT
Due to decreasing $ rate against Indian
rupees exporters were earning less
The exporters increase their prices so as
to receive the same income in rupees as
they did before, the demand of their
commodities felt and lead to greater
losses.
This lead to an adverse effect on Indias
 IMPORT
India imports generally Petroleum
products, capital goods, fertilizers,
chemicals, pulp and uncut stones.
The importers in the case of a stronger
rupee now had to pay more for the same
commodity as the exporters increased the
price for the same .
Thus it also lead to hike in price and fall in
 CORRECTIVE STEPS TAKEN TO CHECK
RECESSION
RBI needed to neutralize the outflow of FII money by
unwinding the market
In the IT sector, there should be correction in salary
offerings rather than job cutting.
Public should spend wisely and save more.
Taxes include excise duty and custom duty should be
reduced to lighten the adverse effect of economic
crunch on various industries
In real estate the builders should drop prices, so as
to bring buyers back into the market
 CURRENT ECONOMIC SCENARIO -
IMPACT OF RECESSION IN INDIA
Recession has grabbed almost all the organization of the
world.
Several people have lost jobs facing financial problems.
Government doing best to come out of the problem.
Banks are providing business loans at low rate.
Government providing money packages to organizations.
Organizations are cutting cost to stand in the market.
RBI has decreased the rate of interest.
The real estate was doing good business
But now a days the condition of real estate is still worse
THANKS