Recession
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A presentation on Effect of recession on agriculture Presented By: Vandana Chandra MBA IVth Semester
What is Recession……???
Before, understanding “RECESSION” we need to understand the market economy:
Two stages of market economy
Two factors of market - demand & supply
Two stages of market economy
Growing market economy
Declining market economy
Growing market economy (the upward trend) Stock market rises, overall
Which finally leads to
Which leads to
Investors believe trend Will continue, so value Of stock increases.
In response to Increased demand, Producers hire more People & consume More raw material. Which leads to
With more money, Investors buy more Stock & consume More goods & services Which leads to
Which leads to
Consumers feel confident In the future of the Economy, so they buy More stuff.
Increase employment Means even more people Can buy stuff.
Declining market economy (the downward trend) Which leads to
In response to decreased Demand, producers lay Off people & decrease Consumption of raw mat. Which leads to
Consumers do not feel Confident about the economy, So they buy less stuff.
Which leads to
Unemployed workers have Less money to spend, So demand decreases Further.
Employed workers fear they Will loose their jobs, so they Spend less money. Which leads to
Investors fear the value of stocks Will decrease, so they are less Which finally leads to Stock market fails, overall. Willing to invest in new companies
Two factors of market – demand & supply
PRODUCERS, wants his demand, to be high always.
CONSUMERS, wants his buying cost to be low.
Demand is the price at which consumer is ready to buy, & producer is ready to sell.
Recession…..???
Recession, means the economy is shrinking for two consecutive quarters, i.e. 6 months, with a decrease in the G.D.P., i.e. Gross Domestic Product.
GDP = Value of all reported goods & services produced by the people operating in the economy.
If GDP, is growing, then market is growing due to Increased demand.
Why recession happens…???
Over production
Low confidence level
Why recession happens…??? Over production
Pseudo demand actual need was not There, wrong Projections.
Companies produced more
A situation in which the supply Exceeds the nation’s Ability to consume what Has been produced. Supply > demand
Low confidence level… Low confidence level
Word of mouth
Word of mouth
Low confidence level Of millions of Consumers & Producers after They hear about The various job cuts, Demand comes Down, companies Become Bankrupt.
Consumers are fearing that they may loose Their jobs, so they have less confidence to spend money & buy goods. This will Result in reduction in demand in the Market. Consumers start saving money Instead of spending it. This is a downward Trend in the economy Producers do not stock material; they Reduce their production, gets into cost Reduction activities. They get worried About their profitability.
How to know its recession…???
• people buy less stuff. • decrease in factory production • growing unemployment • slump in personal income • an unhealthy stock market
Other indicators of recession…. Population increasing
Moves towards enclosures
Pressure on Food supplies
Factors that may suggest that there was a crisis
Specialized farming
Changes in Economic Climate e.g. Cloth industry
Inflation, Lower wages
Developments & difficulties in Agriculture
Development of specialized farming. for e.g. dairy farming, which lead to shortages of grain.
Main shift towards sheep & cattle due to demand for wool & leather. A move away from grain production, because a profitable situation could be seen in the production of wool & leather.
Enclosures seen by the contemporaries as the cause of all the problems of agriculture. (which include higher grain prices, periodic food shortages, etc.)
However, other factors like bad weather leading to poor harvests could not be ignored.
Contd…
Indian agriculture has not impacted by global economy crises, except some export oriented crops.
India’s workforce depends on agriculture and he expects a bumper crop this year and feels it will continue to grow at a robust space.
About 60-65% of India’s population and workforce depend on agriculture and agriculture continues to grow at a robust pace.
The rabi crop is the main agricultural crop in India. In terms of sown area of wheat; we have already sown 2.69 million hectares as against last year’s 2.19 million hectares on the corresponding date.
The monsoon had been good.
How to come out of recession…??? Fiscal policy
Govt. influences the economy by changing how it (govt.) spends & collects money.
Tax cuts for Businesses Or for individuals
More money Available For spending
More spending By govt. to Create jobs.
Individuals Get salary & They spend money
Automatic Fiscal policy; Unemployment insurance
Some income For Unemployed People to spend
Demand picks Up; market can Recover.
How to come out of recession…??? Monetary policy
Govt. manipulates the available supply of money in the country
Reduce Reserve ratio
More money Available For banks To give loans
Lower the Interest rates
Individuals Take more loans
Use its Own Reserved Money to buy Govt. bonds
It becomes An income to Govt. to Inject money In the market
Demand picks up; Market can Recover.
What is Recession……???
Before, understanding “RECESSION” we need to understand the market economy:
Two stages of market economy
Two factors of market - demand & supply
Two stages of market economy
Growing market economy
Declining market economy
Growing market economy (the upward trend) Stock market rises, overall
Which finally leads to
Which leads to
Investors believe trend Will continue, so value Of stock increases.
In response to Increased demand, Producers hire more People & consume More raw material. Which leads to
With more money, Investors buy more Stock & consume More goods & services Which leads to
Which leads to
Consumers feel confident In the future of the Economy, so they buy More stuff.
Increase employment Means even more people Can buy stuff.
Declining market economy (the downward trend) Which leads to
In response to decreased Demand, producers lay Off people & decrease Consumption of raw mat. Which leads to
Consumers do not feel Confident about the economy, So they buy less stuff.
Which leads to
Unemployed workers have Less money to spend, So demand decreases Further.
Employed workers fear they Will loose their jobs, so they Spend less money. Which leads to
Investors fear the value of stocks Will decrease, so they are less Which finally leads to Stock market fails, overall. Willing to invest in new companies
Two factors of market – demand & supply
PRODUCERS, wants his demand, to be high always.
CONSUMERS, wants his buying cost to be low.
Demand is the price at which consumer is ready to buy, & producer is ready to sell.
Recession…..???
Recession, means the economy is shrinking for two consecutive quarters, i.e. 6 months, with a decrease in the G.D.P., i.e. Gross Domestic Product.
GDP = Value of all reported goods & services produced by the people operating in the economy.
If GDP, is growing, then market is growing due to Increased demand.
Why recession happens…???
Over production
Low confidence level
Why recession happens…??? Over production
Pseudo demand actual need was not There, wrong Projections.
Companies produced more
A situation in which the supply Exceeds the nation’s Ability to consume what Has been produced. Supply > demand
Low confidence level… Low confidence level
Word of mouth
Word of mouth
Low confidence level Of millions of Consumers & Producers after They hear about The various job cuts, Demand comes Down, companies Become Bankrupt.
Consumers are fearing that they may loose Their jobs, so they have less confidence to spend money & buy goods. This will Result in reduction in demand in the Market. Consumers start saving money Instead of spending it. This is a downward Trend in the economy Producers do not stock material; they Reduce their production, gets into cost Reduction activities. They get worried About their profitability.
How to know its recession…???
• people buy less stuff. • decrease in factory production • growing unemployment • slump in personal income • an unhealthy stock market
Other indicators of recession…. Population increasing
Moves towards enclosures
Pressure on Food supplies
Factors that may suggest that there was a crisis
Specialized farming
Changes in Economic Climate e.g. Cloth industry
Inflation, Lower wages
Developments & difficulties in Agriculture
Development of specialized farming. for e.g. dairy farming, which lead to shortages of grain.
Main shift towards sheep & cattle due to demand for wool & leather. A move away from grain production, because a profitable situation could be seen in the production of wool & leather.
Enclosures seen by the contemporaries as the cause of all the problems of agriculture. (which include higher grain prices, periodic food shortages, etc.)
However, other factors like bad weather leading to poor harvests could not be ignored.
Contd…
Indian agriculture has not impacted by global economy crises, except some export oriented crops.
India’s workforce depends on agriculture and he expects a bumper crop this year and feels it will continue to grow at a robust space.
About 60-65% of India’s population and workforce depend on agriculture and agriculture continues to grow at a robust pace.
The rabi crop is the main agricultural crop in India. In terms of sown area of wheat; we have already sown 2.69 million hectares as against last year’s 2.19 million hectares on the corresponding date.
The monsoon had been good.
How to come out of recession…??? Fiscal policy
Govt. influences the economy by changing how it (govt.) spends & collects money.
Tax cuts for Businesses Or for individuals
More money Available For spending
More spending By govt. to Create jobs.
Individuals Get salary & They spend money
Automatic Fiscal policy; Unemployment insurance
Some income For Unemployed People to spend
Demand picks Up; market can Recover.
How to come out of recession…??? Monetary policy
Govt. manipulates the available supply of money in the country
Reduce Reserve ratio
More money Available For banks To give loans
Lower the Interest rates
Individuals Take more loans
Use its Own Reserved Money to buy Govt. bonds
It becomes An income to Govt. to Inject money In the market
Demand picks up; Market can Recover.
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