Recent Recession

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 1

1) INTRODUCTION Recession is the result of reduction in the demand of products in the global market. Recession can also be associated with falling prices known as deflation due to lack of demand for products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growth in the economy. Recession in the West, in 2008 especially the United States, is very bad news for our country. The companies in India have most of out sourcing coming from the United States. When our exports to United States increased over the past years, exports for January declined by 22%. There is a decline in the employment market due to the recession in the West. There has been a significant drop in the new hiring which is a cause of great concern for United States. Some companies have laid off their employees and there have been cut in promotion, compensation and perks of the employees. Companies in the private sector and government sector are hesitant to take up new projects. And they are working on existing projects only. Projections indicate that up to 1 crore persons could lose their jobs in the current Fiscal year ending March. The 1 crore figure has been compiled by the Federation of Indian Export Organization [FIEO], which says that it has carried out an intensive survey. The Textile, Garment and Handicraft Industry are worse affected. Together they are going to lose 4 million jobs by April 2009 according to the Federation of India Export Organization [FIEO]. There has also been a decline in the tourist inflow lately. The real estate has also a problem of tight liquidity situation, where the developers are finding it hard to raise finances. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 2

IT Industries, Financial sector, Real Estate Owners, Car Industry, Investment Banking and Other Industries as well are confronting heavy losses due to fall down of global economy. Federation of Indian Chambers of Commerce and Industry [FICCI] found that with the global recession, inventories industry like Garments, Gems, Textile, Chemicals and Jeweler have cut production 10% to 50%.

1.1) Definition:

Recession is not to be confused with depression. Recession means a slowdown or slump or temporary collapse of business activity. In its early stage it can be controlled in a methodical matter. Experience helps to avert total collapse. Unchecked, it leads to serve depression. Depression is the dead end. It is the time to close shop completely. It is a total state of irrevocable economics failure. When a country is doing well as round its Gross Domestic Product [GDP] is on the rise. Overall economy is bullish; it is not only the stock exchange that tells riches to rags stories but even small businesses. It all adds to the burden on the National Exchequer. An economist may give a detailed, comprehensive definition of recession. But for the Layman who has been affected knows it only when he loses his job and has no money to pay his credit and loans. Recession is when the customer faces foreclosure and the banker comes knocking for recovery of his loan. Many companies and even countries go bankrupt for want of liquid funds and cash flow for even daily requirement. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 3

A recent news in the Economic Times says that the Govt. of U.K. has decided to mortgage its reserves in order to face the acute recession. It you look at it from the point of view of a businessman, recession is a transitory phase. The Business cycle dating committee of the National Bureau of Economic Research [NBER] has another definition. It profiles the business that has peaked with their activity in one reason and fall naturally in the next season. It regains its original position with new products or sales and continues to expand. This revival makes the recession a mild phase that large companies can tolerate. As the fiscal position improves there is no reason to worry. Recession can last up to a year. But when it happens year after year then it is serious.

1.2) Are we facing recession or not: Yes, for the simple reason that not only our neighbors but our friends are unemployed. There is less of business talk and more billing worries. Transitory recession is good for the economy, as it trends to stabilize companies to slow down and take stock. There is a saying, ‘when it’s tough the tough get going and going’. The weaker companies will not survive the brief recession also. Stronger companies will pull through then resources. Then is it time to worry? When you are facing a foreclosure, when the chips are down and creditors file cases of recovery. Firms face closures when they go through recession and are not able to recover from losses. If, at this time, they are not able to sustain their prices and stocks then there is more trouble. Even when the recession periods get over, they will not be able to do well. If a business survives a recession period they should be able to survive a depression. But how many P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 4

recession proof businesses are there who will eventually survive the recession? 1). those that have been able to save their funds. 2). those who have not invested in fly-by-night companies. 3). those who remain calm till the storm passes. 4). those that trade stock immediately and decide to reinvest in a Recession proof business.

1.3) Identifying recession: In a 1975 New York Times article, economic statistician Julius Shiskin suggested several Rules of Thumb to identify a recession; these included the rule of two successive quarterly declines in GDP [Gross Domestic Product]. Over time, the other rules have been largely forgotten, and a recession is now often identified as the reduction in a country’s GDP [Gross Domestic Product] or [negative real economics growth] for at least two quarters. Some economists prefer a more robust definition of a 1.5% rise in unemployment with in 12 month. In the United States the business cycle dating committee of the National Bureau of Economic Research [NBER] is generally seen as the authority for dating US recession. The National Bureau of Economic Research [NBER] defines on economics recession as ,”a significant decline in the economics activity spread across the country, lasting more than a few months, normally visible in real GDP [Gross Domestic Product] growth, Real Personal Income, Employment [non-farm payrolls], Industrial Production, and Wholesale-Retail sales”. Almost universally academic economists, policy makers, and businessmen defer to the determination by P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 5

the National Bureau of Economics Research [NBER] for the precise dating of a recession onset and end.

1.4) Causes of recession: a) Currency Crisis: A currency crisis which is also called a BOP [Balance of Payment], occurs when the value of a currency quickly, under mining its ability to serve as a medium of exchange or a store of value. It is a type of financial crisis. Currency crisis can be especially destructive to small open economic or bigger, but not sufficiently stable ones. Government often taken on the role of fending of such attacks by satisfying the excess demand for a given currency crisis using the country’s own currency reserves or its foreign reserves. As are accompanied with speculative attack on the country and at the time of attack the currency is under the final exchange rate region. b) Energy crisis: `

An energy crisis is any great bottleneck in the supply of energy

resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resource. An energy crisis may be referred to as an oil crisis, petroleum crisis, energy shortage, or electricity crisis. c) War: War is a reciprocated, armed conflict between two or more noncongruous entities, aimed to reorganizing a subjectively designed, geopolitically desired result. War is an interaction in which two or more P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 6

opposing forces haves a struggle of wills. War is not necessarily considered to be the same as occupation, murder or genocide because of the reciprocal nature of the violent struggle and the organized nature of the units involved. War is limited to the human species engaged in massive conflicts which might be termed warfare and chimpanzee pads will engage each other in tribe like warfare. d) Under consumption In under consumption theory, recession and stagnation arise due to inadequate consumer demand relative to the amount produced. It is an old concept in economics, going back to Thomas Maithus it not earlier, the concept of under consumption has been US ed repeatedly as part of the criticism of say’s law until under consumption theory was largely replaced by Keynesian economics which points to a more explanation of the failure of aggregate demand to attain potential output i.e. the level of production corresponding to full employment. e) Overproduction: In economics over production refers to excess of supply over demand of products being offered to the market. This leads to lower prices and unsold goods. Over production is the accumulation of unsolvable inventories in the hands of business. f) Financial Crisis: The term financial crisis is applied broadly to a variety of situation s where some financial institutions or assets suddenly lose a large part of their values. In the 19 and 20th century many financial crisis were P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 7

associated with banking prices and many secession coincided with these panics. Other situation that is often called financial included stock market crashes and busting of other financial bubbles, currency crisis and sovereign defaults.

1.5) Effect of recession: a) Bankruptcies: Bankruptcy is a legally declared inability or impairment of an individual or organization to pay his creditors. Creditors may file a bankruptcy application against a debtor in an effort to recoup a portion of what they are owned or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor. b) Credit Crunches: A credit crunches is a reduction in the general availability of loans or sudden lightering of the condition required to obtain it loan from the banks. A credit crunch generally involves reduction in the availability of credit independent of a rise in official interest rates. Many times a credit crunch is accompanied by a flight to quality by lender and investors, as they seek less risky investments. c) Deflation: In economics deflation is a decrease in the general price level of goods and service. Deflation occurs when the inflation rate falls below or resulting in an increase in the real value of money allowing one to buy more goods with the same amount of money. Deflation is also linked with P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 8

recession and with great depression historically not all episodes of deflation correspond with periods of poor economic growth. d) Foreclosure:

Foreclosure is the legal and professional proceeding in which a mortgagee or other lien holder usually a lender obtains a court ordered terminations of a mortgagor’s equitable right of redemption while this equitable right exist the lender cannot be sure that it can successfully repossess the properly, thus the lender seeks to foreclosure the equitable right to redemption. e) Unemployment: Unemployment occurs when a person is available to work and seeking work but currently without work. The prevalence of unemployment is usually measured using the unemployment rate, which is defined is the percentage of the in the labor force who are unemployment rate is also used in economics studies and economic indices such as the US [United States] conference bards index of leading indicators as a measure of the state of the macro economics.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 9

1.6) Stock market and Recession:

Some recessions have been anticipated by stock market declines. In stock for the long run, Siegel mentions that since 1948, ten recessions were preceded by a stock market decline, by a lead time of 0 to 13 months [average 5.7 million], while ten stock market declines of greater than 10% in the DJIA [Dows Jones Indus trial Average] were not followed by a recession. The real-estate market also usally weaknes before a recession. However real-estate declines can last much longer than recession. Since the business cycle is very hard to predict, Siegel argues that it is not possible to take advantage of economic cycles for timing the investments. Even National Bureau of Economic Research [NBER] takes a few months to determine if a peak or through has occurred in the US [United States]. During an economic decline, high yield stocks such as fast moving consumer goods, pharmaceuticals, and tobacco tend to hold up better. However when the economy starts to recover and the bottom of the market has passed growth stocks tend to recover faster. There is significant disagreement about how health care and utilities tend to recover. Diversifying one’s portfolio into international stocks may provide some safety, however economics that of the US [United States [may also be affected by a recession in the US [United States]. There is a view termed as the Halfway Rule according to which investors start discounting an economic recovery about halfway through a P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 10

recession. In the 16 US recessions since 1919, the average length recession has been shorter. Thus if the 2008 recession followed the average, the downturn in the stock market would have bottomed November 2008.

1.7) Recession and Politics: Generally an administration gets credit or blame for the state of the economy during its time. This has caused disagreement about when a recession actually started. In an economic cycle a downturn can be considered a consequence of an expansion reaching an unsustainable state and is corrected by a brief decline. Thus it is not easy to isolate the causes of specific phases of the cycle. The 1981 recession is thought to have been caused by the tight money policy adopted by Paul Volker, Chairman of the Federal Reserve Board, before Ronald Reagan took office. Reagan supported that policy economist Walter Heller, Chairman of the Council of Economic Advisers in the 1960s, said that “I call it a Reagan Volcker Carter recession. The resulting taming of inflation did, however, set the stage for a robust growth period during Reagan’s administration. It I generally assumed that government activity has some influence over the presence or degree of a recession. Economists usually teach that some degree of recessions is unavoidable, and its causes are not well understood. Consequently, modern government administration attempts to take steps to harness recession also not agreed upon. They are often unsuccessful, at least at preventing a recession, and it is difficult to establish whether they actually made it less severe or longer lasting.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 11

1.8) History of recession: There is no commonly accepted definition of global recession; IMF [International Monetary Fund] regards periods when global growth is less than 3% to be global recession. The IMF [International Monetary Fund] estimates that global recession seems to occur over a cycle lasting between 8 and 10 years. During what the IMF [International Monetary Fund] terms the past three decades, Per Capita global output growth was zero or negative. Economists at the IMF [International Monetary Fund] state that a global recession would take a slowdown in global growth to three percent [%] or less. By this measure, three periods since 1985 qualify: 1990-1993, 1998, and 2001-2002. According to economists, since 1854, the US [United States] has encountered 32 cycles of expansions and contraction, with an average of 17 months of contraction and 38 months of expansion. However, since 1980 there have been only 8 periods of negative economic growth over one Fiscal Quarter or more, and 4 periods considered as recession: • January-July 1980 and July 1981- November 1982; 2 year totals. • July 1990-March 1991 8 months. • March 2001-November 2001: 8 months. • December 2007- current 15 months as of March 2009. From 1991 to 2000, the US [United States] experienced 37 quarters of economic expansion, the longest period of expansion on record. For the past three recessions, the National Bureau of Economic Research [NBER] decision has approximately conformed to the definition. Involving two consecutive quarters of decline, it was preceded by 2Q [Two Quarters] of alternating decline and weak growth. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

2)

Page│ 12

RECESSION IN US AND OTHER COUNTRIES.

Official economic data shows that a substantial number of nations are in recession as of early 2009. The US [United States] entered a recession at the end of 2007 and 2008 and many other nations followed suit. The US [United States] housing market correction [a consequence of US housing bubbles] and sub prime mortgage crisis has significantly contributed to a recession. The 2008-2009 recessions is seeing private consumption fall for first time in nearly 20 years. This indicates the depth and severity of the current recession with consumer confidence so low; recovery will take a long time. Consumers in the US [United States] have been hard hit by the current recession, with the value of their house dropping and their pension saving decimated on the stock market. Not only have consumers watched their wealth being eroded them now fear to lose their jobs as unemployment rises. United States employers shed 63,000 jobs in February 2008, the most in five years. Former Federal Reserve chairman Alan Greenspan said on April 6, 2008 that ‘there is more than 50% chance the United States could go into recession”. On October 1, 2008 the Bureau of Economic Analysis reported that an additional 156,000 jobs had been lost in September 2008 were declared by Moody’s to be in recession. In November 2008 employers P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 13

eliminated 533,000 jobs, the largest single month loss in 34 years. For 2008, an estimated 2.6 million US jobs were eliminated. Although the US economy grow in the first quarter by 1% by June 2008 some analysts stated that due to a protracted credit crisis and “rampant inflation in commodities such as Oil, Food and Steel; the country was nonetheless in a recession. The 3Q [Third Quarter] of 2008 brought on a GDP {Gross Domestic Product] retraction of 0.5% the biggest decline in 2001. The 6.4% decline in spending during Q3 [Third Quarter] on nondurable goods, like clothing and food, was the largest since 1950. A November 17, 2008 report from the Federal Reserve Bank of Philadelphia based on the survey of 51 forecasters suggested that the recession started in April 2008 and will last 14 months. They project real GDP [Gross Domestic Product] declining at an annual rate of 2.9% in the Q4 of 2009. These forecasts represent significant downward revisions from the forecasts of three month ago. A December 1, 2008, report from the National Bureau of Economic Research [NBER] stated that the United States has been in a state of recession since December 2007 [when economic activity peaked], based on a number of measures including job losses, declines in personal income, and decline in real GDP [Gross Domestic Product]. A few other countries have seen the rate of growth of GDP [Gross Domestic Product] decrease, generally attributed to reduced liquidity sector price inflation in good and energy, and the US slowdown. These include the United Kingdom, Canada, Japan, Australia, China, New Zealand and the Euro zone. In some, the recession has already been confirmed by experts, while others are still waiting for the Q4 [Fourth Quarter] GDP [Gross

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 14

Domestic Product] growth data to show two consecutive quarters of negative growth. India along with China is experiencing an economic slowdown but not a recession.

2.1) Past recession in the US: The United States economy has suffered 10 recessions since the End of World War II. The great depression in the United States was an economic slowdown, from 1930 to 1939. It was a decade of high unemployment, low profits, low prices of goods, and high poverty. The trade market was brought to a standstill, which consequently affected the world markets in the 1930s. Industries that suffered the most included Agriculture, Mining and Logging. In 1937, the America economy unexpected fell, tasting through most of 1938. Production declined sharply, as did profits and employment. Unemployment jumped from 14.3% in 1937 to 19.0%. The United States saw a recession during 1982-83 due to a tight Monetary Policy to control inflation and sharp correction to overproduction of the previous decade. This was followed by Black Monday in October 1987, when a stock market collapse saw the Dow Jones Indus trial Average plunge by 22.6% affecting the lives of millions of Americans. The early 1990s saw a collapse of junk bonds and a financial crisis. The United States saw one of its biggest recessions in 2001, ending ten years of growth, the longest expansion on record. From March to November 2001, employment dropped by almost 1.7 million. In the 1990-91 recessions the GDP [Gross Domestic Product] fell to P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 15

1.5% from its peak in the second quarter of 1990. The 2001 recession saw a 0.6% decline from the peak in the Q4 [Quarter Fourth] of 2000. The dot-com burst hit the US economy and developing countries as well. The economy also suffered after the 9/11 attacks. In 2001, investor’s wealth dwindled as technology stock prices crashed.

2.2) Current crisis in the US:

The defaults on sub prime mortgages [home loan defaults] have led to a major crisis in the US. Sub prime is a higher risk debt offered to people with poor credit worthiness or unstable incomes. Majors banks have landed in trouble people could not pay back loans. The housing market soared on the back of easy availability of loans. The reality sector boomed but could not sustain the momentum for long, and it collapsed under the gargantuan weight of crippling loan defaults. Foreclosures spread like wildfire putting US economy on shaky growth.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 16

3) IMPACT OF AMERICAN RECESSION ON INDIA.

Indian companies have major outsourcing deals from the United States. Indians exports to the US have also grown substantially over the lose between 1 to 2 percentage points in GDP [Gross Domestic Product] growth in the next Fiscal year. Indian companies with big tickets deals in the US would see their profit margins shrinking. The worries for exporters will grow as rupee strengthens further against the dollar. But experts note that the long-term prospects for India are stable. A weak dollar could bring more foreign money to Indian markets. Oil may get cheaper brining down inflation. A recession could bring down oil price to $70 per barrel. The whole of Asia would be hit by a recession as it depends on the US economy. Even though domestic demand and diversification of trade in the Asian region will partly counter any drop in the US demand, one simply can’t escape a downturn in the world’s largest economy. The US economy accounts for 30% of the world’s GDP [Gross Domestic Product]. Says Sudip Bandyopandhyay Director and CEO, Reliance Money “in the globalize world complete decoupling is impossible. But India may remain relatively less affected by adverse global events, “in fact, many Small and Medium Companies [SMCs] have already started developing trade ties with China and European countries toward off big losses. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 17

Manish Sonthalia, head, equity, Motilal Oswal Securities says if the US economy contracts much more than anticipated, the whole world’s GDP [Gross Domestic Product] growth which is estimated at 3.7% by the IMF [International Monetary Fund] will contract, and India would be no expectation. The only silver lining is that the recession will happen slowly, probably in six months or so. As of now, IT and IT-enabled services, Textiles, Jeweler, Handicraft and Leather segments will suffer loses because of their trade link certain sections of commodities could face sharp impact due to the volatile nature of these sectors. C.J. George, Managing Director, Geojit financial services, says profit of lots of re-export firms may be affected. Countries like China import commodities from India do some value-addition and then export them to the US. The IT sector will be the worst hit as 75% of its revenues come from the US. Low demand for services may force most Indian fortune 500 companies to slash their IT budgets. Zinnov consulting a research and off shore advisory, says that besides companies from ITES and BPO automobile companies will be affected. During a full recession, WE companies in health care, financial services and all consumers demand driven firms are likely to cut down on their spending. Among other sectors, manufacturing and financial institutions are moderately vulnerable. If the service sector takes a serious hit, India may have to revise its GDP [Gross Domestics Product] to about 8 to 8.5% or even less Lokendra Tomar, Senior Vice-President, integrand, a BPO [Business Process Outsource] firm, says the US recession is likely to have a dual impact on the outsourcing industry. Appreciating rupee along with poor P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 18

performance of US companies [low firms, investment banks and media houses] will affect the bottom line of the outsourcing Industry. Small BPO’s [Business Process Outsource] which are operating at a net margin of 7.8% will find it difficult to survive. According to Dharmakirti Joshi, Director and Principal Economist of CRISIL, along and serve recession will, seriously affect the portfolio and fixed investment flows. Corporate will suffer from volatility in foreign exchange rates. The export sector will have to devise new strategies to enhance productivity.

3.1) Consequences of US recession on India job market: Worst affected because of United States recession will be the service industry of India. Under service industries come BPO, KPO, IT, ITETS, etc. Service industry contributes about 52% to India’s GDP [Gross Domestic Product] growth. Now if that is going to get hurt then it will also hurt India’s overall growth but very slightly. India is not going to face a majority impact due to US recession. People may say that there is going to be a huge job loss due to recession and will cite the example of TCS [TATA CONSULTANCY SERVICE] firing about 500 employees but these were employees who didn’t perform and for cost cutting one have to reduce non performing asset and that exactly what has been done. There is no threat to the skilled people. According to NASS company India will have a shortage of about 5 million skilled people in IT/ITETS. Apart from this India’s Travel, Tourism and Power industry is going to grow at a better rate. This is again a good sign. India has a huge population and a huge consumer base so we don’t have to always depend on US for our growth. India’s GDP [Gross Domestic Product] is expected to P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 19

grow at the rate of 8.5 - 8.9 which is again way above the growth rate of US and only second highest in the world after China. This recession gives United States opportunity to be innovative and to think out of box so that US directly doesn’t affect our robust growth. Due to increasing Rupee exporters are having a hard time but it has been noted that our exporters are not that efficient and in past they got the benefit of depreciating rupee. So now its time to be innovative and more effective and increase the over all efficiency and go for systematic cost cutting to balance the rupee effect. Infact there are lots of scope for improvement. In West Africa goods at departmental stores are sold at the rate 5 times than Indian prices and Indian goods are not exported to several countries in West Africa, it’s an excellent opportunity for our exporters.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 20

4) RECESSION and INDIAN INDUSTRIES:

In the current global economic slowdown, every sector of business is being affected and is witnessing a hard time. But IKON marketing consultants reports that in India there are few sectors which will grow in this adverse situation. As every business sector is affected by present global crisis and everybody is talking of slowdown in business, still in India there are few sectors will grow in this adverse situation. Let’s have look: A) FOOD: No one can survive without basic food material like milk, vegetables and drinking water. Food processing companies will not be affected much and rather will earn profits by increasing the prices. These are the basic needs which we as a common man can not produce by our self. According to Ministry of Food Processing Industry [MFPI], the food processing industry in India was seeing growth even as the world was facing economics recession. According to the Minister, the industry is presently growing at 14% against six to seven percent growth in 2003-2004. The Indian food market is estimated of over US $182 billion and accounts for about two third of the total Indian retail market. Further, the retail food

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 21

sector in India likely to grow from around US $70 billion in 2008 to US $ 150 billion by 2025. B) RAILWAY: As the aviation sector has been affect much badly and resulting in sharp rise in the air ticket rates the frequent traveler’s will prefer railways to cut the cost of traveling and this will result in increased traffic in railway and long queues at railway booking counters. The freight traffic of Indian railways has continued to grow in the last few months, albeit at slow pace, indicating only marginal impact of the global recession on the Indian economy. The railway registered 13.87 % growth in revenue to Rs. 57,863.90 crore in the first nine months ended December 31, 2008. While total earnings from freight increased by 14.53% at Rs. 39,085.22 crore during the period, passenger revenue earning was up 11.81% at Rs. 16,242.44 crore. The railways have enhanced freight revenue by increasing its axle loading, improving customer service and adopting an innovative pricing strategy. C) PSU BANKS [Public Sector Unit] As seen in the private sector much of the job cuts due to global slowdown, its public sector unit [PSU] Banks which against gained much confidence due to job safety and security. More and more people to turn onwards government institutions, particularly banks in the quest for safety and security. A report “opportunities in Indian Banking sector”, by market research company, RNCOS [Research and Consultancy Solutions] forecasts

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 22

that the Indian banking sector will grow at a healthy Compound Annual Growth Rate [CAGR] of around 23.3% till 2011.

D) EDUCATION: As education is considered as the basic necessity and in India it is seen as a long term investment by presents and with respect to the demand still there is a huge supply gap. The craze of study in foreign universities among the Indian youth still alive which will prompt foreign education institutes to target India provided vast young population is willing to join. We will see more and more educational institutions coming up in India in recent coming years. Huge government as well as private investment is likely to flow into the Indian educational system D.E.Shaw, a US $ 36 billion, global private equity firm is planning to invest around US & 200 million in the Indian Education sector. E) TELECOM: People will not stop to communicate with each other due to global crisis rather it has been seen that it will increase much particularly with mobile communication. With cheap cell phones available in the Indian market and cheaper call rates, the sector has become the necessity and primary need of everyday life. Telecom sector, according to industry estimates, year 2008 started with a subscriber base of 228 million and will likely to end with a subscriber base of 332 billion a full century. The telecom industry expects to add at

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 23

least another 90 million subscriber in 2009 despites of recession. The Indian telecommunication industry is one of the fastest growing in the world and India is projected to become globally by 2010.

F) IT [Information Technology]: Recent news shows that Indian IT sector will grow 30 to 405 in this year. And on the other side to survive in current slowdown, industries have to decrease the cost and for that they will result to customized IT solutions which will further boost up the software solution demand. India is fast becoming a hot destination for outsourced e-publishing work. As per a Confederation of Indian Industry [CII] report, the industry is growing at an annual rate of 35% and India’s outsourcing opportunities in the value-added and door service such as copyediting, project management indexing, media services and content deployment will help make the publishing BPO [Business Process Outsource] industry worth US $ 1.46 billion by 2010. G) HEALTH CARE: India in case of health care facilities stick lakes the adequate supply. In health care sector also there is huge gap between demand and supply at all the levels of society. Still there are so many urban areas were you could you hardly find any multi specially hospital. And in case of metros the market sentiments itself created a need of psychological consolation. Health care. This is a US $ 35 billion industry in India, is expected to reach over US $ 75 billion by 2012 and US $ 150 billion by 2017. The healthcare industry is interestingly poised as it strives to emerge as a global P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 24

hub due to the distinct advantage it enjoys a clinical excellence and low costs. H) LUXURY PRODUCTS: The high and affluent class of society will not be affected much by this global crisis even if their worth is reduced significantly. They will not change their lifestyle and will not stop spending on luxurious goods. So luxurious products market will not be affected and in fact to maintain the lifestyle those affluent will spend more for it. Luxury car makers are pouring in to the nouveau riche [Audi, BMW are the most recent entrant]. I) M&A & MARKETING CONSULTANTS: As in the current business slowdown survival will be the main focus, the marketing and management consultants will be called for to reduce the costs and to show the ways to survive and stay in market. Others may join hands to flight with this situation together will call for the marketing & M&A consultants. In a booming market there are growth strategies and M&A opportunities to advice on when business are caution back, consultancies will be right there to help clients decide where to wield the axe. According to Ministry of Commerce and Industry’s estimation, the current size of consulting industry in India is about Rs.10, 000 crores including exports and is expected to grow further at a CAGR of approximately 25% in next few years. J) MEDIA AND ENTERTAIMENT: In current bad news times, where people are losing jobs and getting enough time to watch TV, they will seek entertainment at home and hence P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 25

advertising revenues will increase for the commercial channels. Also business like production of religious texts and religious materials, religious channels will do well. The TRP of religious channels will increase compare to the other entertaining commercial channel.

5) SMEs: STRENGTH OF INDIAN ECONOMY:

5.1) SMEs: Like India are in a state of transition. They are striving to be outward looking global economies rather than inward looking local economies. In a changed scenario, this can be possible only if Small and Medium scale Enterprises [SMEs] are adequately bolstered. With more than 13 million SMEs operating in the country, India can certainly boast of quite a handful. SMEs [Small and Medium scale Enterprises] are new economics visionaries fuelling economic growth. They are the leaders who will pioneer products and jobs and create new exports. As the country swims against the recessionary tide to stay afloat, it is waking up to the reality that in the changed scenario, SMEs hold the key to prosperity in THESE recessionary times, developing country. •

Significant Strides Despite Odds:

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 26

SMEs [Small and Medium Enterprises] have, over the years, made significant strides through thick and thin and have achieved objectives like contribution to domestic production, export earning, low investment and flexibility in operations and also inadequate contribution towards to R&D [Research and Development]. In spite of these limitations the SMEs [Small and Medium Enterprises] have made significant contribution towards technological development and exports. SMEs [Small and Medium Enterprises] have been established in almost all major sector in the Indian industry such as food processing, agricultural inputs, chemical and pharmaceuticals, computer software and so on. •

Swimming Against Slowdown: A survey undertaken by the Federation of Indian Chambers of

Commerce and Industry [FICCI] says 94% of the SMEs [Small and Medium Enterprises] have been “severely to moderate hit” by the economics slowdown. The survey was conducted among 116 SMEs manufacturing a diverse range of products from 20 locations across the country, mostly catering to the export market. Among other factors, rising cost of raw materials and lack of buyers for product were high lighted as the problematic areas. It is estimated that SMEs [Small and Medium Enterprises] account for almost 90% of industrial unit in India and 40% of value addition in the manufacturing sector. They contribute 35% to India’s merchandise export. Towards meeting the National Development objectives of growth rate of over 8% on a sustained basis, it is imperative for the industrial sector to P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 27

grow at a faster pace supported by a vibrant SMEs sector towards this, the government’s policy initiative like enactment of the new Micro Small and Medium Enterprises Development Act [MSMED] 2006. Their future scope for increasing their export potential market share in domestic market and then achieving status of serious players in the “global value chain” access to finance and capital are the key resources for improved competitiveness and effective operation of SMEs. •

BANK FINANCE To SMEs: A) BANK OF INDIA: In recognition of the fact that the MSMEs

[Micro Small and Medium Enterprises] can indeed rejuvenate the economy in the face of the global economic slowdown, BOI [BANK OF INDIA] continues to be a pioneer in extending liberal credit to the sector. Te bank’s lending to MSMEs [Micro Small and Medium Enterprises] sector has grown from Rs. 11,649 crore as on 31.03.2005 to Rs. 25,443 crore as on 31.03.2009, showing an average annual growth rate. The bank has achieved these results by adopting many aggressive measures some of them being 1) Attaching high priority to MSMEs lending while finalizing corporate credit budgets year after year. 2) Granting adequate lending powers to the line functionaries. 3) Enunciating a liberal and customer centric SMEs policy. 4) Laying down stiff deadline for disposal of credit request received at branches. 5) The bank has formed 88 clusters in different areas and has extended credit of about Rs. 1,000 crore. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 28

B) STATE BANK OF INDIA [Pillar of support since 1956]: SBI [STATE BANK OF INDIA] has been playing a vital role in the development of small scale industries since 1956. SBI USP [Unit Selling Plan] lies in the fact that it is not just a fair weather bank, but stands by its customers in the up saving as well as the down swing. To service the specific credit needs of SMEs [Small and Medium scale Enterprises], SBI establishes the SMEs business unit in 2004. During the year 2008-2009 advances to MSME sector increased to Rs. 93,808 crore as on 31.02.2009 from Rs. 74,324 crore as on 31.03.2008, registering a growth of 26.21%. While deposits of SMEs increased by Rs. 53,042 crore during year 2008-2009. SBI has two schemes namely ´SMEs care” and “SMEs help” were launched to meet the urgent fund requirement. Recently the bank has launched a new loan product called “SBI Micro Loan” where maximum loan amount will be 5 lakh to meet the requirement of both working capital and equipment purchase “traders easy loan has been further simplified the process”.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 29

5.2) Micro finance:

•

Meaning: Micro finance is the provision of broad range of financial services

such as deposits, loans, payments service, money transfers and insurance to poor people and low income households and their micro enterprises. It is an effective tool for making the banking services accessible to the rural unbaked arrears. Improved access and efficient provision of savings, credit insurance facilities would enable the poor setup micro enterprise, build up economic assets, manage the risks better and enhance income earning capacity and resulting improve their standard of living. •

Small Lenders Beat Big Crisis:

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 30

While big banks blazed with toxic assets in major economies, tiny tenders in poor villages in the developing world should have crumbled under pressure. This hardly business is called microfinance, where specialized lenders borrow money from mainstream financiers like banks to and lend to poor entrepreneurs without credit histories. This lender called Micro Finance Institutions [MFIs] serves up small, something 100 or lower, to borrowers who are excluded from the formal banking system. This is a far cry from sub prime borrowers who borrowed too much without the means to pay back. Financing the needs of this “bottom billion” eager to step out the poverty trap caught the imagination of commercial investors over the last decade. While about 100 million borrowers crowed the sector, 80% of whom are served by only 20% of the MFIs [Micro Financing Institutions], this is only a length of the total number of potential borrowers. From near 30 years ago, microfinance lending hit nearly $14 billion in 2007. The founders range from large public and private sector donors to commercial investors. Leading up to the financial crash in 2008, funding glutted the market as too much capital chased too few top tier MFIs [Micro Finance Institutions]. Both domestic and international capital markets vied to lead to MFIs, who played them off against each other for lowest priced and largest loans. But as soon as the crisis hit investors were quick to turn off the tap.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 31

• Micro Financing In India Needs Technology Shift: To overcome the shortcoming a technology based model using straight through processing is evolved by Sukkaki Foundation. India is a country of villages even today but an account of lack of infrastructure resulting in lack of opportunities for the population migration of youth continues unabated. The urban centers are getting flooded with masses. To step this migration we have to private opportunities to under privileged people of rural areas. Micro finance is a major tool available to create opportunities and help people to raise their quality of life. Although this fact is well establishes and understood the approach taken to achieve is yet to prove itself and hence despite huge money mode available for these projects success is nowhere visible. The business correspondent and business facilitator model envisioned by RBI [Reserve Bank of India] and commercial banks needs majors revamp. • Micro finance: Impact On Indian Market: Industry estimates peg the reach of MFIs [Micro Finance Institutions] at over 50 million individual customers. Micro finance, which includes a wide variety of financial service such as Micro-Remittance, Micro-Saving, Micro-Credit, Micro-Pension, and Micro-Insurance, has seen substantial growth in India in the last few years. Industry estimates pay the reach of MFIs [Micro Finance Institutions] at over 50 million individual customers, the vast majority of which are serviced and governed through the Self-Help Group [SHG] model While the reason that MFIs originally started business was to address the unorganized money lending business, the overall intention was P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 32

to enable the poor to get out of their debt traps from local money lender by providing credit for income generating activities, in addition to services that would allow a safety net for their families, such as micro-insurance. Micro finance has impacted not only the rural and urban poor, but also a number of business units that serve this target segment such as in A) Financial inclusion B) Provision of high growth markets for industry. C) Rural employment. D) Creation of micro-entrepreneurs. E) Education. While the sustainability v/s outreach challenges still exists when it comes to reaching out to people in remote arrears, or it people with low economic and social status , technology is continuously evolving, and is available to circumvent and/or address these challenges and enable MFIs [Micro Finance Institutions] to further their positive impact on society.

•

Recession Has Not Affected US As We Depend More On Domestic PSU’s: “Evangelical Social Action Forum [ESAF] was established in 1992

as a Christian response to the social and economics needs of people. ESAF [Evangelical Social Action Forum] stands for sustainable holistic transformation of the poor and marginalized for a just t and society. K.Paul Thomas, Managing Director of ESAF micro finance and investment shares his thoughts with Finance enterprises”

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 33

(Interview with a Que. & Ans) 1) What service does MFIs provide to reduce poverty and how? Ans. From the ESAF [Evangelical Social Action Forum] point of view we organize poor people into group and sangams to identify their problems in an efficient manner. We give them loans for income generation and consumption and encourage their saving habit through their sangam an apex federation. The positive economics features thus entertain social development. They also provide them business development service by imparting entrepreneurship training and giving them marketing support through their retail outlets. 2) How can MFIs be made more affordable to the poor? Ans. The interest rate can be reduced in outreach. More outreach means more business volume. In another way, interest rates can be reduced if the government allows the MFIs to accept deposits from their borrower, which will help them to access low cost funds. 3) What should be the role of the banks in the proper functioning of the MFIs? Ans. The commitment of commercial bank to micro leading has been fragile and not based solidly in its institutional mission. This situation should be changed of course; the main role of the bank is to provide adequate funds on P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 34

time, to meet the requirement of MFIs [Micro Finance Institutions]. They should also bring an end reduce the red tapes involved in sanctioning of loans. Faster procedures help the MFIs to meet the client requirement faster. 4) What is the role of the government in the upliftment of this sector? Ans. Now the government has accepted the significance of micro finance through the budget, so it is obligatory for them to pass the micro finance sector development and regulation bill at the earliest. Through RBI [Reserve Bank of India], SIDBI and NABARD the government can provide refinancing and infrastructure support to MFIs. 5) In the context of micro lending what is the scenario now in the wake of recession? Ans. In India economy at the grass root level are still vibrant and MFIs[Micro Finance Institutions] mostly deal with these groups. Hence the repayments are not affected, but the flow of money into the sector from international bank got slightly affected due to recession. The fact, that we depend more on domestic PSU [Public Sector Unit] bank reduced the effect of recession on MFIs [Micro Finance Institutions]. 6) Micro finance is the new buzz in mutual fund industry in India. How can it set a new dimension to the industry? Ans. The mutual fund companies can utilize the clientele of Mutual Fund companies. Apart from that mutual fund providers should come with some innovative Systematic Investment Plan schemes which are compatible with the income level of the poor. This allows the poor to enjoy the advantages of investing in capital market. 7) What should be the guidelines for the functioning of MFIs?

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 35

Ans: At present Microfinance non banking financial companies are working under the guidance of RBI [Reserve Bank of India]. Saadhan- an association of MFIs in India has published a code of conduct for its member MFIs. But NGO [Non Government Organization], MFI [Micro Finance Institution] are not regulatory authorities. So it is important that micro finance regulatory bill, which is hanging fire from 2007, should passes at the earliest. All MFIs should be regulated by this Bill. 8) How can financial inclusion help in the empowerment of women? Ans. The best possible way to expand the efforts of financial inclusion is through the empowerment of women. When a woman starts earning independently they can improve the well-being of their household and educate the children. Moreover Self Help Group boosts their social networks and community participation. 9) What are your suggestions to the finance ministry to make MFIs more profitable? Should they be given more tax concessions? Ans. Of course tax concessions are required to MFIs to make more profits. Considering the key role played by MFIs to balance the economy interest subsidies should be provided. Also debt relief schemes applicable to commercial bank should be made applicable to MFIs as well. •

How Can We Develop Microfinance Sector: The bank is undertaking the micro financing activity through 2

delivery channels 1} extends the finance to micro finance institutions for onward lending to Self-Help Groups [SHG]. 2} extends credit facilities to the SHG’s for onward lending to their members. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 36

The bank has been consistently taking initiatives to develop the micro finance sector and to expand the outreach and increasing the coverage under micro finance. During the year 2009-2010 bank has declined to develop and promote at least 5 Self Help Group [SHG], in each village in the area of operation and to ensure their credit linkage. Bank is also extending finance to the micro finance institutions for on lending to SHGs so that their credit requirements can be fulfilled.

6) RECESSION: AN OPPORTUNITY FOR INDIAN ECONOMY. 6.1) Global Recession is also an opportunity for India: The near recession in the United States and the global meltdown of course, have its impact on India High-Tech Industry, as it is one of the greatest financial crisis of globalize times. But it also presents an opportunity for Indian services vendors to improve their market share, while forcing them to diversify and de-risk across sector and geography. Lehman Brothers went bankrupt September 15. A day earlier, Merrill Lynch had announced that Bank of America was acquiring it. A week earlier, US mortgage giants Freddie Mac and Fannie Mac went into Federal Receivership. And with each news flash the Indian sensex swung widely downward, partly in sympathy, partly with foreign funds pulling out because e they needed the cash. And the jitters echoed in the hallways of a host of tech service companies who were servicing any of these firms, or their US based suppliers, this was bad news the Indian and business process P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 37

outsourcing service industry is strongly dependent an North America and specifically on the sector that we call BFIS [Banking, Finance, Insurance, and Services]. Accordingly, many of the Indian tech/ BPO [Business Process Outsource] services exporters looked harder beyond North America, which used to account for of our services export 3 years ago. They went to Europe and Asia and an adventure few Indian companies even came to the India market Financial services have been the mainstay of Indian software and BPO services exports. This began to change a few years ago, with telecom and engineering services picking up. That process has now accelerated. Telecom is a huge growth market in Asia and especially in India and China. The United States congress approved a revised $700 billion package to bail out the US financial sector. This means major opportunity for India based service companies. India is not de-linked from the world, and the financial meltdown has certainly impacted US. While some of the impact is real and direct like foreign institutional investors pulling out funds, which they needed back home and thus causing havoc with rupee a lot of it is wild overreaction. Yet, Indian services vendors have an opportunity waiting. There are factors in their favor. The dollar has swung very hard in the other direction now. India brand and regulation of areas, beginning with financial services but now extending to telecom, engineering services and medicine and more is on the rise. Even so, it will mean belt tightening and more focus on efficiency, just as the fuel crisis and cost is forcing United States towards more efficient transport. The global financial meltdown will mean some tough tomes for its P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 38

suppliers, but the fittest will survive and emerge stronger and many will find opportunity in the crisis.

6.2) Branding in Times of Recession: Over the past few years, brand equity has emerged as a key strategic asset. CEOs in many industries now see their brands, whether product, service or corporate, as a source of strategic control and a way to build stranger with customers. The importance of the brand as a strategic asset is broadly accepted and top management agrees to varying degrees depending on the nature of their industry, that brand equity has to be developed and leveraged strongly brands are recognized as intangible assets that influence investment decisions and market capitalization and as leading indicators of future revenue streams. When the economy stalls most companies take a closer took at their physical assets and assess what is critical and what is expendable or can be deferred. However, they are often not as careful regarding investments needed to support their intangible assets, including brands, and slash them perfunctorily, without thinking about the damage that may occur, because e at these times, these investments are suddenly viewed as deferrable expense and not as investment.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 39

Yet, when there is an economic downturn brand support is amongst the first to face a cut. Companies surrender painstakingly built brand equity by laying off customer service personnel a terrible decision determinate in the long term. After all while customer value is realized value the potential for future value generation lies in brand equity and its stability in customer relationship. In a downturn, understanding customer is even more critical. Instead of cutting the market research budget protect the budget and preserve the longer term projects concerning innovation and trends. We must known where our customers are going over through the downturn in a better competitive position. Most immediately we need to know how customers are redefining value as price elasticity curves changes. Customers search and negotiate harder for durable goods. They are more willing to postpone purchases, trade down or buy less. Many are shifting down the “no frills”. New product launches under the aegis of a trusted brand often soon are more likely to succeed because e interest in new brands and new categories wanes, as risk invernesses dominates.

6.3) Winning In Turbulent Times: •

An Unprecedented Global Crisis: March 16, 2008 Bear Stearns is acquired for 2 dollars a share against

its 52 weeks high of 134 dollars a share. July 14, 2008 oil hits 145 dollars a barrel and then collapses to34 dollars with in 6 months. September 15, 2008 collapse of Lehman Brothers. November 20, 2008 Dow Jones at a record low of 7449 points. June 1, 2009, General Motors files for bankruptcy. We P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 40

are living in a time that seen unprecedented volatility. From boom to bust in a matters of month. •

The India Impact: While the crisis began with the US housing market, the ferocity and

speed with which it has appeared around the world and even into India has surprised everyone. As the governor of the RBI DR. D.Subbaro, pointed out in a recent speech “contrary to the decoupling hypothesis” emerging economies too have been hit by the crisis. In a rapidly globalization world the decoupling hypothesis was never totally persuasive. However it is still good particularly at a time when many other economies in the west are actually shrinking. • Crisis As An Opportunity: Over the last 100 years or so that unilever has been in existence we have leveraged these crisis into opportunities and emerged stronger each other. It sounds simple enough today but to be able to execute this strategy we had to develop an even sharper understanding of rapidly to these changing consumer needs and to respond to these changes quickly. Cash generation and cost saving were key. This was achieved by single mindedly reducing completely in our operations. Consumer understanding has always been and will continue to be at the heart of our business. At a time like this, it is crucial to understand and respond to changing consumer and shopping behavior. In the words of Mahatma Gandhi, “The future depends on what we do in the present” it is precisely with this inspiration and spirit that we seek to win in these turbulent times”. -Harish Manwanl. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 41

(Chairman of HUL at the company’s AGM held on Friday, July 3 2009).

6.4) Steps Taken by Government and RBI: The Central Bank even cut its benchmark report rate by150 basis points to 7.5% on October 19, 2008 in an attempt to get some of that money out of the bank vaults still no go. The RBI recently turned up the thermo state once more this time to bank to starts lending at reduced interest rates. It cut its benchmark report and reserve rate by 100 basis points. But again, there hardly any movement. The bank are still carting their surplus cash over to the RBI and dumping it there for safe keeping, for even as a low a return as 5%. Take a look at the money tipped over at the RBI window. For the first five days of the month, till the RBI cut the rater, banks plunked Rs.243,310 crore with the RBI for a return only 6% over the next 3 working days, banks again deposited Rs.84,635 crore with Central bank for a return of just t 5%. The total for just t 8 days works out to over Rs. 327,000 crore. In effect this means banks are still way of leading to corporate despite the sea of liquidity and rate cuts unleashed by the central bank. These also then convey how banks are still uncertain about the future and that they are about the ability of their corporate clients to pay up in time. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 42

Here’s an example a PSU [Public Sector Unit] was able to issue 5 years bonds to banks with a coupon of 9.33% around the same time, one of the top 5 India INC companies also borrowed 3 years money. But at 10.10% clearly cut banks are willing to take a risk and the government, even if it’s a subsumed severing guarantee, but not an even. Private company’s banks have not forgotten the nightmares of the early 1990s when bank NPA ruled around 10.14%. This time despite the prodding forms the government and the central bank they are unwilling to stick their neck outs. The RBI has allowed banks to restructure loans a euphemism for looking the other way when a loan from bad that might in ordering times have been called for stricter treatment. But the banks are still not biting. The problem also seems to be in the system liquidity absorption capacity. Whatever steps the government takes at moment such as providing cheap cash to corporate through a variety of refinance windows not only are banks reluctant to lead even corporate are loath to load up their balance sheets with fresh debt. Many of them are drawing down their existing credit lines with banks emboldened some what by the new restricting space to finish existing projects but are unwilling to bet on new projects. Therefore, the key to the current economic impasse lies on the demand side. The government has tried addressing the issue by spending on infrastructure and by cutting taxes to boost demand. There are also not without their associated problems. Any investment in infrastructure will yield results only after a long lag, and the nature of improved technology does not allow for the higher employment generation that one saw few years ago. Plus to get an infrastructure project started is also time consuming financial closure in these days of clammy credit markets is a tough call.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 43

Some economists say that the production orientation of the economy has changed in favor of expensive consumer products a sector that might slow off the blocks in reviving. In such situation reviving demand for wages goods might needs to be tested. The occasion might present itself soon with experts forecasting a better than average winter crop, the government should facilitate hassle free can be spent. This may sound simplistic, but storing the physical infrastructural infirmities should be one of the first achievable steps on the long road to recover.

7) BREAKING NEWS:

7.1) RBI puts trust reserves in foreign bank again:

In what could be another sign of revival of confidence in the global financial system the RBI has slowly started moving back to foreign exchange reserves. According to the latest RBI figures, assets parked with foreign commercial banks rose gradually from $4,729 million in February to $5,092 million in July. Last year, after the sub prime crisis broke out the central bank had withdrawn fund sparked with foreign commercial banks and moved them to safer queues such as other central banks, the Bank for International P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 44

Settlements [BIS] and the international monetary fund. This began happening much before the collapse of the Lehman Brothers in September 2008 when the rumbling over sub prime loans begins to rail global markets. Banks of the reserves are invested either in top-rated sovereign paper or with other central banks the Bank for International Settlements [BIS] and International Monetary Fund [IMF] as they are considered safe and liquid queues. Of later the central bank has stated parking a small portion of its forex assets with foreign commercial banks where the returns are marginally higher. Explaining its rationale of deploying the forex reserve RBI in its latest annual report said that as such the foreign currency assets are invested in multi currency and multi market portfolio decisions involving the pattern of investment are driven by the broad parameters of portfolio management namely safety liquidity and returns. It has also acknowledged that in response to the development in the global financial markets in 20082009, the strategy was suitably adjusted in regard to commercial bank. As for the recent pick up in exposure with foreign commercial bank an economist with an American investment bank speaking on condition of anonymity, said “since the country in which the money is parked in not made public, it is difficult to acknowledge this as a trend. This is because e the dollar has bean weakening against major global currencies. If the money is parked in a Non-US commercial bank a lot of the enhanced exposure that one is seeing with commercial banks could be a valuation effect.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 45

RBI [Reserve Bank of India] expresses its foreign currency assets in dollars. However it holds a host of currencies, including the ones in the basket comprising the Sterling, Pound, Euro and Yen, besides the dollar. In addition there is a small diversified portfolio of non currencies. However no Central Bank makes public, the currency composition of its reserves.

7.2) Weak global market likely to weigh on Dalal Street: Shares in India are likely to open weak a Tuesday, following a downtrend in world markets on Monday. Key Asian and European markets clocked looses on concerns that valuations have become expensive after the 6 month long rally. Shares in Hong Kong, Taiwan and South Korea ended marginally lower while most markets in Europe were down around 1% or more. The emerging markets index comprising 22 countries fell 0.7%. According to Bloomberg Data, the index is quoting at a price earning ratio of around 21 times trailing 12 month earning its highest level in over 9 year. Back home, the sensex is quoting at a 12 month trailing price earning ratio of roughly 22 times, way below the 29 times it was quoting at in January 2008 before the market crashed . Market watchers say foreign fund flows P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 46

will be crucial for the market to sustain recent gains as domestic institutions have cut back on their purchases significantly. The United States Federal open market committee begins its two days meeting on interest rate policy on Tuesday. Most experts feel rates will belief unchanged. In a recent interview, US President Barack Obama said he did not expect the job market to improve any time soon despite signs of an uptrend, there is speculation that the fed may discuss s cutting back on the economic stimulus package it had unveiled to cushion the impact of the recession. The index of US leading economics indicators in August rose for the fifth straight time, further strengthening the popular view that an economics recovery is underway. The conference board’s gauge of the economic outlook for the next 3 to 6 months rose 0.6% in line with what most exports had estimated. The latest rise comes on the back of a revised 0.9% rise in July. Most of the United States Macro Economics data in the past 2 weeks, such as retail sales, new home construction, have been better than expected. However, rising unemployment continues to be a cause for worry. There are concerns that co-ordinate pull back of the economic stimulus across markets could tighten liquidity, causing a partial pull back of funds from risky assets like emerging markets equities crude, oil prices fell 2.5% to 70.23% a barrel on the New York mercantile exchange. Gold and Copper prices too were under pressure. The dollar climbed 0.6% against Euro, its second consecutive day of gains. But the recent news is that the Sensex has touched the magic figure of 17 thousand points. It shows that India is fast recovering from the dismal recession it had been experiencing.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 47

7.3) US job losses slow unemployment dips: The America Economy lost 247,000 jobs ion July and in a reversal, the unemployment rate fell slightly to 9.4%, the government reported on Friday {7-8-09}. Although business are expected to keep cutting jobs through the rest of the year, the US Labor Department latest figures offered. Some faint sign that the sinking job market was approaching bottom.

The length of work week in creased albeit slightly foe 1st time since August t. A sign that businesses were not scaling back hours to cut their pay roll costs. The government said fewer jobs were lost this spring than it had initially estimated, reversing June job losses to 443,000 from 467,000. “The basic message is that the rate of job cuts is diminishing and that’s good news” said Nariman Behravesh chief economies at its global insight. The Obama administration weathered intense criticism last month when the place of the job losses accelerated after leveling off in May. Conversation critics have the monthly jobs report which has rapidly because e a political football, as evidence that the stimulus was not working, while liberal have previously maintained that it showed have the economy needed another jolt of stimulus .

7.4) Indian job losses slow unemployment dips: P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 48

Five lakh people were rendered jobless between Octobers to December 2008 due to the recession, according to the latest government study. The findings are part of a first of its kind survey conducted by the labor and employment as part of a study on the effect of economics slowdown unemployment in India. A sample size of 2,581 units covering 20centres across 11 states was taken up of the survey. Eight major sectors like Textile and Garment industry, Metals and Metal product, IT and BPO, Automobile, Gems and Jewelers, Transportation, Construction and Mining industries were also included in the survey. The total employment in all these sectors had come down from 16.2 million in September 2008 to 15.7 million by December 2008.exporting unit has observed a higher decline in employment with gems and jeweler force. This is followed by metal and textile sector which lay off 2.6% and 1.29% of their work force respectively. Among the domestic sector units, gems and jewelery again witnessed the maximum decline in employment with 11.9% of their work force losing jobs. This was followed by automobiles and transport sector that shed 4.79% and 4.03% of their workforce. The study also ford that the overall decline in contract workers was observed to be 3.88% during the period in comparison to only 0.63% decline direct employees.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 49

But once again the good news is that the corporates are likely to hike the pay of their executives by 11 to 12 %

7.5) Sub prime:

In order to understand what is now happening in the world economy, we need to go a little back in past and understand what was happening in the housing sector of America for past many years. In United States, a boom in the housing sector was driving the economy to a new level. A combination of low interest rates and large inflows of foreign funds helped to create easy credit condition where it becomes quite easy for people to take home loans. As more and more people took home loans, the demand for property increased and fueled the home prices further. As there was enough money to lend to potential borrowers, the loan agencies started to widen their loan disbursement reach and relaxed the loan conditions. Since almost everybody was driven by the greed factor during that housing boom period the common sense practice of checking the customer’s repaying capacity was also ignored in many cases. As a result, many people with low income and bad credit history or those who come under the NINJA [No Income, No Job, and No Assets] category to all principles of financial prudence. These types of loans were known as sub-prime loans as those P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 50

were are not part of prime loan market [as the repaying capacity of the borrower was doubtful]. Like this way, the US banks were losing their funds in property and having no cash in hand. Again these policies of United States were applying to some other countries also and results are also same shown out, due to this it will become a sub-prime crisis. Though, America is a Capitalist country [liquid- cash] they only know how to earn money. America is very much famous in producing weapons. They sell their weapons to other countries and earn money.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 51

8) IS RECESSION OVER?

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 52

8.1) Recession very likely over:

Federal Reserve Chairman Ben Bernanke said on

Thursday [15-9-09] that the worst US recession since the great depression was probably over, but the recovery would be slow and it would take time creates new jobs. “Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for sometimes” Barnake said after recovery would be slow and it would take time create new jobs. “Even though from a technical perspective the recession is very likely over at this point, it’s still going to feel like a very weak economy for sometimes” Barnake said after giving speech at a Brooking Institution conference. In declaring the recession over, Bernanke went slightly beyond the fed’s most recent assessment that the economy was leveling off and that indicators on growth had improved. However he cautioned that growth next year would probably be not much faster than the economy so called long run potential rate, which meant it would be slow to absorb excess capacity and pare the unemployment rate. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 53

“The general view of most forecasters is that pace of growth in 2010 will be moderate less than you might expect given the depth of the recession because of ongoing headwinds” Bernanke said. He spoken on the one year anniversary of the collapse of Lehman Brothers, which sparked a global panic that the fed to cut interest rates to almost 0%. Economists generally estimated United States trend potential growth to be in a range around 2.5% Bernanke acknowledged that a recovery could turn out to be either stronger or weaker than forecasters expect, but warned of ongoing pain in the labour market under the expected growth rate. -Bernanke Ben.

8.2) US job losses may be finally over: The number of Americans filing first time claims for jobless benefits fell unexpectedly last week, a sign that the labour market is deteriorating at a slower pace as the economy pulls out of the recession. Application dropped by 12,000 to 545,000 in the week ended September 12, 2009, from a revised 557,000 the week before, labour department data showed in Washington on Thursday [10-09-09]. The total number of people collecting unemployment insurance rose the prior week, to 6.23 million. The job market may be starting to stabilize as government and private reports reinforce forecasts that economics growth will resume this quarter. Economists surveyed by Bloomberg this month said the

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 54

unemployment rate will reach 10% this year, a reminder that hiring and not pick up for several months and that consumer likely won’t lead the recovery. It is nice to see another move down in initial claims, but the continuing number is definitely kind of sticking at pretty high levels said Michael Feroli an economist at JP Morgan chase and company in New York. As long as were continuing to see pretty high initial and continuing claims we’ll still have negative job growth. -Shobhana Chandra.

8.3) The END of the Recession:

It appears the US economy is not shrinking any more. Pundits are predicting a 2.3% growth in the GDP [Gross Domestic Product] in the 3Q [Third Quarter] of the current year. If their perditions turn out to be correct, the length of the current recession would be about 19 months the longest since the Great Depression but just two or three months longer than the P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 55

recession of early 1970s and early 1980s and the sixth longest since the beginning of the 20th century. Short, it may be but the so called likely end of the recession does not look sweet. The US economy remains fragile and job market conditions are terrible. The economy has lost close to 7million jobs in less than 2 years. The job loss continues although at a much lower pace than it did at the peak of the recession. True, there is some good news driving the positive forecasts. In the 2Q [Second Quarter] of this year the GDP [Gross Domestic Product] fell by just 1% after shrinking by 6.5% in the 1Q [First Quarter]. According to Christina Romer, Chief of the Presidents Economy Advisory Council, the government stimulus package raised GDP [Gross Domestic Product] growth in the 2Q [Second Quarter] by at least 2% points. Non-government experts give some what less credit to the stimulus package per se but there appears to be a consensus that government intervention has rescued the economy front recession. Stimulus spending has been just one of the several way in which the government has tried to rescue the economy and so far, not the most significant one. Perhaps that most important government intervention was the bailout of banks that restored confidence in the ability of the banking system to cater to corporate credit needs. The Federal Reserve is also buying trillion of dollars worth of mortgage backed securities which has lowered mortgage costs for home owners and new buyers. These decisions have been heavily criticized by the media and US congress, but they have helped rescue the economy from what could have became a second depression.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 56

The good news is that the signs of economics recovery appear to be global. A recent OECD report states that there are strong signs of economic recovery in Italy and France and clear signs of troughs in Canada, Germany, The United Kingdom and The United States. Asian economies are also emerging from economics slowdown. Such recovery, if it materializes will strengthen global economic growth. There is also some mention that the current recession will not be Vshaped but W-shaped meaning that the current expected recovery will be followed by another recession very soon. The long-term job market situation; however appears to be very bad. According to July employment report, a third of the unemployment have been out of work for more than 6 months, the highest since the government started collecting this data in 1948. The number of persons who have been unemployment for at least 15 months has increased by 7.4% since last December. Indeed, if recession were measured by the state of the job market, pundits would be cautions in pronouncing end of the recession in the US. President Obama approval rating will not remain insulated from the state of the job market for long and therefore his government is expected to use stimulus funds to create jobs.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 57

8.5) THE INDIAN SCENE:

“TIME TO TIGHTEN BELTS” Later this month Prime Minister Man mohan Singh will travel to Pittsburgh and meet the heads of government of the G20 nations. Among other things, they’ll talk about when would be the best time to start tightening fiscal belts around the world. For over a year now, as rich nations slipped into recession, their governments have thrown money around and dropped interest rates to stem the slide. This seems to have paid off: the global economy is pulling back from the brink. Even federal boss Ben Bernanke now believes that the US is back on the road to slow recovery.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 58

Many people believe that all countries should tighten their belts together: a “co-ordinate exist strategy “ if you like Jargon for India, that would mean keeping interest rates low and money supply trotting along briskly for some more time, may be for as much as another year, while the West limps back to normally. That would be a big blunder. India’s economy is very different from the development ones. There’s no reason why India’s policies should move in lockstep with the West. The Great Depression thought as that India’s economy is far, far more resilient to shocks than many supposed. Yes, the contraction in the West hurt some export oriented industries, but even that shocks seems to be easing. Maruti Suzuki, the 800 kg Gorilla of India’s car industry sold 40% more cars in August this year compared to August last Year. Export are a big driver the West is suddenly discovering the virtues of saving money and small, fuel efficient cars that were made for the thrifty Indian car buyer are now best sellers overseas. India domestic demand also seems to have up well. Hero Honda, the market leader in motorcycle grew August sales by 37%. India has an enormous enthusiasm for infrastructure, everything from roads, ports and power to schools and water supply. A research from Goldman sacs, published last week, reckons that India will need $11.7 trillion to fund all this over the next 10 year. That’s a huge turn of money, but the report goes on to say that Indians can fund it out of their own pockets. Unlike the US where the savings rate was zero in 2008 and has climbed back to about 7% today’s, Indians save a lot. The saving rate is already over 35% of incomes and Goldman Reckons this’ll raise to 40% in P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 59

another 7 years. Don’t be surprised by this high number, it seems to be fairly common in Asia Singapore’s saving rate has been around 45% for the last 26 years, Chinas since 1993 and Malaysia’s from 1996. Developed countries have relied on consumption to drive growth. Over the next 10 years or so, India will rely on investment and savings to grow. But to get there, we need policies that protect our own interest, not chase the latest global fad. The main threat to saving is inflation, rising price that eat into the value of every rupee saved. Anyone who shops for food will tell you that there’s only one way that price have moved in the last one year. Northwards, its not just food that’s getting costlier, all commodities are, from a lower of $37 per barrel, crude oil new traders at $71; Gold recently hit $1,017 per ounce, a level way above its historical trends of around $300 per ounce, Iron Ore, Copper and Zinc price are also soaring. High cost Gold affects the jeweler business, but ever rising food budgets could bankrupt families. No democracy in India the political tolerance for high inflation is very low. That’s something Manmohan Singh and his team need to remember when they talk” Exist Strategy” in Pittsburgh. For India, which never went through a recession the problems are entirely different. We need to invest for the long term. To do that, people need to have the confidence that inflation isn’t going to vaporize their saving. The only sensible option is to start right now, without for other nations to start tightening their belts. India’s weathered the global crisis relatively well. It now has to move fast so that prices are termed before the rest of the world goes into a high inflation spirit. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 60

IMPORTANT THOUGHT FOR RECESSION.

“ Coming together is Beginning, Keeping together is Process, Working together is SUCCESS”.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 61

HOW SHOULD I ARREST RECESSION? FINANCE MINISTER.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 62

Survey Data 1) Company: LIC [Life Insurance Sector]—91M. ►PERSONAL DETAILS: A) Name: Arvind Amrute. B) Age :

48 yrs.

C) Sex :

Male.

D) Phone. NO.: 9869453900. E) Educational Qualification: B.COM, AIII. F) Address: ----

Q.1) Can you say something about recession? Ans. There is no recession in India. Recession is came when GDP [Gross Domestic Product] growth has come in negative in 3Q [Three Quarter]. In India there is a slow down. Q.2) What is your occupation? (Business/Service) Ans. Service. Q.3) What kind of business do you do? Retail Wholesale P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 63

Agency Service like transport Any other (specify)

Insurance Business. (Marketing and Service) Q.4) What is the effect of recession on your business? A) Downfall in sales/ Increase in sales. B) Downfall in profit/ Increase in profit. Ans. Downfall in sales. Due to slowdown. Q.5) How did you handle the recession? a) Reduce the price. b) Increase the customers by month publicity. c) Use your saving. Ans. During slowdown, marketing was affected as there was less money in the hands of public. With the help of publicity only we have reached revised targets. Q.6) Do you think recession will continue in 2010 also? Ans. No it has already come to an end. Q.7) If yes, what are your plans to face the recession? Ans. NOT APPLICABLE. Q.8) Do you have any suggestion to face the present recession? Ans. 1) No mere recruitment. 2) Limited wage rise or step by step wage hike. 3) Revision of targets [ROTs] within short periods review.

Place: P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 64

(Arvind Amrute)

2) Company: CA (Chartered Accountant). ►PERSONAL DETAILS: A) Name: Sanjay. B. Shinde. B) Age :

42.

C) Sex :

Male.

D) Phone. NO.:

02522-251288.

E) Educational Qualification: C.A. F) Address: 502, Kasar Ali, Bhiwandi. Q.1) Can you say something about recession? Ans. 2009, Recession is global recession. Every country is affected with this. India is one of them, so we cannot define any one reason for recession, there are many reasons. Q.2) What is your occupation? (Business/Service) Ans. Chartered Accountant (Practicing in Bhiwandi services like Accounting and Auditing.) Q.3) What kind of business do you do? Retail Wholesale Agency P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 65

Service like transport Any other (specify)

CA (Chartered Accountant) Q.4) What is the effect of recession on your business? A) Downfall in sales/ Increase in sales. B) Downfall in profit/ Increase in profit. Ans. Our business/ occupation are of such nature that it is having absolute relation with market and accordingly our business turnover and profits increase or decrease. Q.5) How did you handle the recession? a) Reduce the price. b) Increase the customers by month publicity. c) Use your saving. Ans. NOT APPLICABLE. Q.6) Do you think recession will continue in 2010 also? Ans. NO. Q.7) If yes, what are your plans to face the recession? Ans. NOT APPLICABLE. Q.8) Do you have any suggestion to face the present recession? Ans. To face the recession we have proper future planning.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 66

Place: (Sanjay Shinde)

3) Company: Savla Consultancy Service. ►PERSONAL DETAILS: A)Name: Bipin. Nemchand. Savla. B)Age :

33.

C)Sex :

Male.

D)Phone. NO.: 02522-262442/322168. E)Educational Qualification: B.SC, H.D.S.E. F)Address: Haridhara complex, 1st floor, office no.54, station road, Anjurphata, Bhiwandi-421302. Q.1) Can you say something about recession? Ans. Recession is an economics phenomenon where in goods and service offered by different companies or individuals are falling in demand due to the drastic decrease in the spending/ purchasing capacity of people. During recession, many business wind up and people lose their jobs. Q.2) What is your occupation? (Business/Service) Ans. Professional. Insurance and Investment Consultant. Q.3) What kind of business do you do? Retail Wholesale Agency P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 67

Service like transport Any other (specify)

Consulting and Counseling people on Financial Investment. Q.4) What is the effect of recession on your business? A) Downfall in sales/ Increase in sales. B) Downfall in profit/ Increase in profit. Ans. A) Downfall in sales. B) Downfall in profit. Q.5) How did you handle the recession? a) Reduce the price. b) Increase the customers by month publicity. c) Use your saving. Ans. 1) Try to cut experises which are unnecessary or unproductive. 2) Try to attack old and new customer by increasing advertisement and awareness. 3) Launch new products or services. Q.6) Do you think recession will continue in 2010 also? Ans. No. Q.7) If yes, what are your plans to face the recession? Ans. As mentioned in answer to question as above. Q.8) Do you have any suggestion to face the present recession? Ans. 1) Try to cut experises which are unnecessary or unproductive. 2) Try to attack old and new customer by increasing advertisement and awareness. 3) Launch new products or services.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 68

Place: (Bipin. N. Savla)

4) Company: DR. Pravin Jain. ►PERSONAL DETAILS: A)Name: DR.Pravin Jain. B)Age :

35 yrs.

C)Sex :

Male.

D)Phone. NO.: 9324954838. E)Educational Qualification: BHMS, CCH.D.Pharm. F)Address: Arihant Family Care Clinic, shop no. 6, asthavinayak bldg, Anjurphata, AT: post Bhiwandi. Q.1) Can you say something about recession? Ans. It mostly affects middle class people whose monthly income is fixed. Q.2) What is your occupation? (Business/Service) Ans. Business ( Professional). Q.3) What kind of business do you do? Retail Wholesale Agency Service like transport P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 69

Any other (specify)

Professional ( Doctor).

Q.4) What is the effect of recession on your business? A) Downfall in sales/ Increase in sales. B) Downfall in profit/ Increase in profit. Ans. Downfall in profit due to discounts. Q.5) How did you handle the recession? a) Reduce the price. b) Increase the customers by month publicity. c) Use your saving. Ans. Increase the customer by various publicity media: Audio Visual, Mouth to Mouth, Holding & Banner’s, Advertisement, low profit ration. Q.6) Do you think recession will continue in 2010 also? Ans. YES Q.7) If yes, what are your plans to face the recession? Ans. Decrease profit ratio, to give good quality product to customer; Give good service & response to customers. Q.8) Do you have any suggestion to face the present recession? Ans. Increase the productivity, quality consumer ability, & out source to face present recession.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 70

Place: (DR.Pravin Jain.)

5) Company: CLASSES. ►PERSONAL DETAILS: A) Name: Someshwar V Chhittimalle. B) Age :

36.

C) Sex :

Male.

D) Phone. NO.:

9860312929.

E) Educational Qualification: MA, M.COM, LLB, GDC&A, CA(INT), LLM. F)Adress: 539, Pranita complex, Kombad pada. BWD. Q.1) Can you say something about recession? Ans. Recession is the result of over production and poor demand in the market and it is a cyclical in nature. Q.2) What is your occupation? (Business/Service) Ans. Business. Q.3) What kind of business do you do? Retail Wholesale Agency P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 71

Service like transport Any other (specify)

Running coaching institute.

Q.4) What is the effect of recession on your business? A) Downfall in sales/ Increase in sales. B) Downfall in profit/ Increase in profit. Ans. Downfall in profit. Q.5) How did you handle the recession? a) Reduce the price. b) Increase the customers by month publicity. c) Use your saving. Ans. By reduce the price. Q.6) Do you think recession will continue in 2010 also? Ans. No, economy is now over coming from recession. Q.7) If yes, what are your plans to face the recession? Ans. NO COMMENT. Q.8) Do you have any suggestion to face the present recession? Ans. NO SUGGESTION.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 72

Place: (Someshwar v chittimalle)

6) Company: SADGURU PLY CENTRE. ►PERSONAL DETAILS: A) Name: Vijay V Patel, Sandeep V Patel. B) Age :

27 & 24.

C) Sex :

Male.

D) Phone. NO.: 9890417530, 9324744414. E) Educational Qualification: B.COM & M.COM. F)Address: Ashtvinayak bldg, gala no. 4, Agra road, opp. Oswal wadi, BHIWANDI-421302. Q.1) Can you say something about recession? Ans. Recession comes from what? When Import is more than export is called Recession in the Indian market. Automatically Indian currencies flow in down and value also. Q.2) What is your occupation? (Business/Service) Ans. Business. Q.3) What kind of business do you do? Retail Wholesale Agency P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 73

Service like transport Any other (specify)

Q.4) What is the effect of recession on your business? A) Downfall in sales/ Increase in sales. B) Downfall in profit/ Increase in profit. Ans. When I face recession I will increase the sale when I decrease the profit that means Low Cash Sales. Q.5) How did you handle the recession? a) Reduce the price. b) Increase the customers by month publicity. c) Use your saving. Ans. I will handle the recession by reduce the price indirectly will easily face competition. Hence automatically sales will increase and flow of money easily so. I will prefer an (a) option that is Reduce the price. Q.6) Do you think recession will continue in 2010 also? Ans. Yes, because when recession period is continue than slowly slowly it comes Boom period. Indirectly it takes time. Q.7) If yes, what are your plans to face the recession? Ans. First I will plan that why recession comes, than my business and strategy and than finally implementation of all the point. Q.8) Do you have any suggestion to face the present recession? Ans. Devaluation of Indian currencies that automatically export will increase when export is more than money flow easily in Indian market and inflation are goes on down vice a versa of that deflation period comes it mean boom period will start. It is not easy work to devalued the Indian currencies because all the exporter of Indian will sale of his product in Chip Rate as compare to other country exporter.

P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 74

So that I said before LOW MARGIN SALE this is the funda to use all exporters.

Place: (Vijay V Patel & Sandeep V Patel)

7) Company: UBALE VIKAS W (Lecturer) ►PERSONAL DETAILS: A)Name: Ubale.Vikas.W. B)Age:

32.

C)Sex :

M.

D)Phone No:0251-2324675 E)Educational Qualification: PG in Economics. B.ED. M.Phil (Economic) F)Address:- -------Q.1) Can you say something about recession? Ans. ----Q.2) What is your occupation? (Business/Service) Ans Lecturer. Q.3) What kind of business do you do? Retail Wholesale P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 75

Agency Service like transport Any other (specify)

Education

Q.4) What is the effect of recession on your business? A) Downfall in sales/ Increase in sales. B) Downfall in profit/ Increase in profit. Ans. No Business. Q.5) How did you handle the recession? a) Reduce the price. b) Increase the customers by month publicity. c) Use your saving. Ans. This is not a way. Q.6) Do you think recession will continue in 2010 also? Ans. No I don’t so. Q.7) If yes, what are your plans to face the recession? Ans. --------Q.8) Do you have any suggestion to face the present recession? Ans. If you think about this with a cool mind you will find that the underlying cause of this depression is the greed of those who failed to anticipate the consequence of their actions on a more ideological front it is high time to have a rethink on the very idea of free markets and capitalism. I think the time has come to evolve a capitalism where everything works under a broad regulatory frame work and we do not see a repeat of this condition where greed of some people can effect the lives of billions. P.T.O

IMPACT OF RECENT RECESSION ON INDIA AND US.

Page│ 76

Place: (Ubale Vikas W)

P.T.O