RECESSIONS ARE the result of reduction in the demand of products in the global m arket.

Recession can also be associated with falling prices known as deflation d ue to lack of demand of products. Again, it could be the result of inflation or a combination of increasing prices and stagnant economic growth in the west. Our companies in India have most outsourcing deals from the US. Even our exports to US have increased over the years. Exports for January have declined by 22 pe r cent. IT industries, financial sectors, real estate owners, car industry, investment b anking and other industries as well are confronting heavy loss due to the fall d own of global economy. Federation of Indian chambers of Commerce and Industry (F ICCI) found that faced with the global recession, inventories industries like ga rment, gems, textiles, chemicals and jewellery had cut production by 10 per cent to 50 per cent. How it has affected India? In the age of globalization, no country can remains isolated from the fluctuatio ns of world economy. Heavy losses suffered by major International Banks is going to affect all countries of the world as these financial institutes have their i nvestment interest in almost all countries. As of now India is facing heat on three grounds: (1) Our Share Markets are falli ng everyday, (2) Rupee is weakening against dollars and (3) Our banks are facing severe crash crunch resulting in shortage of liquidity in the market. Actually all the above three problems are interconnected and have their roots in the above-mentioned global crisis. For the last two years, our stock market was touching new heights thanks to heav y investments by Foreign Institutional Investors (FIIs).The current financial cr isis has also started directly affecting Indian Industries. For the past few yea rs, the two most preferred method of raising money by the companies were Stock M arkets and external borrowings on low interest rates. Stock Markets are bleeding everyday and it is not possible to raise money there. Regarding external borrow ing from world markets, this option has also become difficult. In the last fiscal year alone, India borrowed $29 billion from foreign lenders a nd got $34 billion of foreign direct investment. A global recession has hurt ext ernal demand. International lenders who have become extremely risk aversive can limit access to international capital. If that happens, both India s financial mar kets and the real economy will be hurt in the process. However, a global depression is likely to result in a fall in demand of all type s of consumer goods. In 2007-08, India sold 13.5% of its goods to foreign buyers . A fall in demand is likely to affect the growth rate this year. Our export may get affected badly. A negative atmosphere, shortage of cash, fall in demands, reducing growth rate a nd uncertainties in the market are some of the most visible aspects of an econom ic depression. What started as a small matter of sub-prime loan defaulters has n ow become a subject of global discussion and has engulfed the global economy sce nario.