A SYSTEMATIC

ANALYSIS ON
RECESSION

Presented By:-
DEEPAK SONI
UIT-RGTU
BHOPAL
 What is Recession?
Ø A Recession is a contraction phase of the business
cycle.

Ø National Bureau of Economic Research (NBER) is

the
official agency in charge of declaring that the economy is
in a
state of recession.
Ø They define recession as :
“significant decline in economic activity lasting more than
a few
months, which is normally visible in real GDP, real income,
employment, industrial production, and wholesale-retail
sales”.
What causes the
Recession?
Ø An economy typically expands for 6-10 years and tends
to go
into a recession for about six months to 2 years.

Ø A recession normally takes place when consumers loose

confidence in the growth of the economy and spend less.

Ø This leads to a decreased demand for goods and services,

which
in turn leads to a decrease in production, lay-offs and a
sharp
rise in unemployment.
 US crisis hits India
US faced major crisis because of -
• Subprime mortgage crisis (home loan
defaults)
• Rising oil prices at $100 a barrel
• Global Inflation
• High unemployment rates
• A declining dollar value
All this slowed down the growth of the economy
and as the GDP growth rate fell to 2%,
recession set in.
Source data: Realtytrac press releases of “US
foreclosure market report”
Oil prices graph
 Low GDP growth
indicating Recession in
 Impact on India
A slowdown in the US economy is bad news for
India because:
Indian companies have major outsourcing
deals from the US
India's exports to the US have also grown
substantially over the years.
Indian companies with big tickets deals in the
US are seeing their profit margins shrinking.
 Anatomy of economic
depression in India
ØShare Market
2. More people have sold the shares in the
Indian share market than they bought in the
recent weeks. This has added to the fall of
sensex to lower points.
3. Foreign investors have pulled out from stock
markets leading to heavy losses in stocks and
mutual funds
4. Stock broking houses are laying-off people
Because of such uncertainty many people
have started saving money in banks rather
ØIT and Real Estate Sector
The key challenges faced by the industry now
are inflation and the psychological impact of the
US crisis, leading the companies to hit the panic
button.
Bonuses, perks, lavish parties, and many other
benefits are missing as companies look to cut
cost.
India's IT export growth is also slowering down
One of the casualties this time are real estate,
where building projects are half-done all
over the country and in this tight liquidity
situation developers find it difficult to raise
Layoff and unemployment
●

Hundreds of workers have lost jobs in diamond

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

Government and other private companies are

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

Tata Motors lay off 400 more workers.

TATA MOTORS to shut two commercial vehicle
plants for six days .
ØReason of Recession in TATA
MOTORS 
The main reason of recession in Tata motors is
that the financers are not ready to financed old
(second hand vehicle) vehicles so fleet owner
couldn’t sell his vehicle and buy new vehicle.
●Comments
The TATA finance is the subsidiary of TATA
motors which finance only new TATA vehicle it
doesn’t finance old vehicle. Tata finance should
finance old vehicle on his term and condition.
Position of the Banks in MP
●It happened because:-
The investors pull out their money from share
market and deposited in the banks.
Interest rates of the banks increased up to 2 to
2.5%.
Recession in the real state and properties
sectors.
Economic Downfall in the share markets.
Endeavour to overcome
Ø There are following steps to overcome
recession

3. Encourage exports.
4. Provide Accessible Credit for Business.
5. Improve Tax Collection.
6. Set Aside Large Amount for Social Welfare.
7. Control Expenditures in Other Fields.
8. Improve Tourism.
 Future scope of this
analysis
Our work is based on the present recession. In
future we utilize this data to overcome
recession and decline rate of production rate in
industries.
This data is also being useful in finding
alternative option to overcome the present and
the fore comings situations and with the help of
this data we can maximize the productivity of
any organization
Special thanks to
PROF. A.C. TIWARI
HOD
INDUSTRIAL & PRODUCTION ENGG.
&
WORLD BANK CO-ORDINATOR (TEQIP)
FOR
SUGGEST US THIS BURNING TOPIC &
INVALUABLE SUPPORT

THANKS