Presentation On Recession

A SYSTEMATIC ANALYSIS ON RECESSION Presented By:-

DEEPAK SONI UIT-RGTU BHOPAL

What is Recession? Ø A Recession is a contraction phase of the business cycle. Ø National Bureau of Economic Research (NBER) is the official agency in charge of declaring that the economy is in a state of recession. Ø They define recession as : “significant decline in economic activity lasting more than a few months, which is normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”.

What causes the Recession?

Ø An economy typically expands for 6-10 years and tends to go into a recession for about six months to 2 years. Ø A recession normally takes place when consumers loose confidence in the growth of the economy and spend less. Ø 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.

US crisis hits India US faced major crisis because of • Subprime mortgage crisis (home loan defaults) • Rising oil prices at $100 a barrel • Global Inflation • High unemployment rates • A declining dollar value All this slowed down the growth of the economy and as the GDP growth rate fell to 2%, recession set in.

Source data: Realtytrac press releases of “US

foreclosure market report”

Oil prices graph

Low GDP growth indicating Recession in

Impact 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 seeing their profit margins shrinking.

Anatomy of economic depression in India ØShare Market 2. More people have sold the shares in the Indian share market than they bought in the recent weeks. This has added to the fall of sensex to lower points. 3. Foreign investors have pulled out from stock markets leading to heavy losses in stocks and mutual funds 4. Stock broking houses are laying-off people Because of such uncertainty many people have started saving money in banks rather

ØIT and Real Estate Sector The key challenges faced by the industry now

are inflation and the psychological impact of the US crisis, leading the companies to hit the panic button. Bonuses, perks, lavish parties, and many other benefits are missing 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 building projects are half-done all over the country and in this tight liquidity situation developers find it difficult to raise

Layoff and unemployment

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Hundreds of workers have lost jobs in diamond

jewellery, textiles and leather industry. Companies in IT industry have stopped hiring and projected lower manpower need. Firms attached to the capital market are laying off people and large companies are putting their future expansion plans on hold.

Industrial sector

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Government and other private companies are

reluctant in starting new ventures and starting new projects. Projects that are halfway to completion, or companies that are stuck with cash flow issues on businesses that are yet to reach break even, will run out of cash. Car, bike & truck sales down Steel plants are cutting production Hospitality and airlines are hit by poor demand

Recession in TATA MOTORS

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Tata Motors lay off 400 more workers. TATA MOTORS to shut two commercial vehicle

plants for six days .

ØReason of Recession in TATA MOTORS  The main reason of recession in Tata motors is

that the financers are not ready to financed old (second hand vehicle) vehicles so fleet owner couldn’t sell his vehicle and buy new vehicle.

Comments

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The TATA finance is the subsidiary of TATA

motors which finance only new TATA vehicle it doesn’t finance old vehicle. Tata finance should finance old vehicle on his term and condition.

Position of the Banks in MP

It happened because:-

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The investors pull out their money from share

market and deposited in the banks. Interest rates of the banks increased up to 2 to 2.5%. Recession in the real state and properties sectors. Economic Downfall in the share markets.

Endeavour to overcome Ø There are following steps to overcome recession 3. 4. 5. 6. 7. 8.

Encourage exports. Provide Accessible Credit for Business. Improve Tax Collection. Set Aside Large Amount for Social Welfare. Control Expenditures in Other Fields. Improve Tourism.

Future scope of this analysis Our work is based on the present recession. In

future we utilize this data to overcome recession and decline rate of production rate in industries. This data is also being useful in finding alternative option to overcome the present and the fore comings situations and with the help of this data we can maximize the productivity of any organization

Special thanks to PROF. A.C. TIWARI HOD INDUSTRIAL & PRODUCTION ENGG. & WORLD BANK CO-ORDINATOR (TEQIP) FOR SUGGEST US THIS BURNING TOPIC & INVALUABLE SUPPORT

THANKS