Presented By :-

 Nitin Kirnapure
 Sumit Yadav
 Vivek Sethia
 Suresh Mahala
 V. Balaji Kishore
 Ashish Yadav
1. What is recession ?

2. Why it happens ?

3. Cause behind recession ?

4. Impact of recession on various sectors ?

5. Last recession in India

6. Slowdown and it’s relation with recession

7. Ways to recover recession

TWO STAGES OF MARKET
ECONOMY

Growing Market Economy

Declining Market Economy

Growing Market Economy
Declining Market Economy
Two consecutive quarters of decline in
Real-GDP is generally considered to be a
recession…

Now What is GDP ?

GDP = Gross Domestic Product
The gross domestic product (GDP)
is one the primary indicators used
to gauge the health of a country's 
economy.
 Effects of Recession

 Consumers lose confidence and

spend less
 Stock Markets fall
 People lose there job
 In recessions, interest rates tend to
fall.
 Increase in burden of a country
The story behind…… !
US RECESSION + GLOBALIZATION = INDIAN RECESSION
 IT AGRICULTURE BANKING

REAL ESTATE

STOCK
MARKET AUTOMOBILES FINANCE
Impact of recession on IT sector
Recession :- IT Sector
DULL PROSPECTS
Revenue growth rate estimates (%) for 2007-08

HSBC JM Morgan Stanley

2006-07 2007-08 2006-07 2007-08

Infosys Tech 47.30 33.60 47.00 29.00

Satyam 36.30 31.60 35.00 24.00

Computer

TCS 40.60 31.30 40.70 28.20

Wipro 41.10 30.70 40.00 26.00

Recession :- IT Sector
 Decline in growth Rate and also revenue
 The business of top 20 firms led by Indian IT bellwethers TCS,
Infosys and Wipro, and multinationals such as HP and IBM,
grew by an average 19 percent, seven of these posted single-
digit revenue growth in 2009.

 Overall, the top 20 Indian software and hardware firms

reported a combined revenue of Rs.183,621 crore (Rs.1.84
trillion/$39.52 billion) in 2009, compared to Rs.149,250 crore
(Rs.1.49 trillion/$32.12 billion) in 2008.
Recession :- IT Sector
Recession :- IT Sector
 Impacts on IT companies:
1. Currency movement
2. Job cutting
3. New avenues
4. Delay in new project
5. Less investment In IT sector
6. No alternate market LIKE U.S.
 Big sector of India

 2nd rank world wide

 16.6%of GDP

 60%of total employee

 Depend upon Monsoon

AGRICULTURE
EXPORT
LOAN

GDP

REVENUE AGRO
PRODUCT
 Indian agriculture has not impacted by global economy crises, except some
export oriented crops.

 About 60-65% of India’s population and workforce depend on agriculture.

Country’s agriculture sector will save the India from the huge impact of the global
economic recession.

 There has been sharp decline in the exports of agricultural and allied products
specifically to countries including the US and Europe during last two years.

 The impact of economic recession on agricultural exports was visible in many

major exported commodities. "The most promising export commodities like
floricultural, poultry products and other animal products have been negatively hit
in contrast to their general growth trend.

 During April 2008-February 2009, the value of export declined from $1,682
million to $735 to the United States.
 agriculture sector is performing well compared too other industries in
recession owing to high food demand, emerging bio fuel markets and
economic recovery.

 There is no impact of global economic crisis on agriculture as compared to

other sectors’

 A key reason for this resilience, despite the turmoil in global markets, has
been the well-timed and mass-based initiatives like the National Food
Security Mission, Rashtriya Krishi Vikas Yojana, expansion of agricultural
credit, agricultural farm loan waiver scheme and enhanced allocation
towards subsidies on fertilisers and electricity has ensured a steady growth
for Indian agriculture and would continue to do the same even if the global
crisis lingers on for long.

 The agriculture sector is showing strong resistance against the global

economic crisis compared to other industries due to consistent strong
demand for food products
 It may not have a
significant direct
impact on agriculture
as the share of FDI in
agricultural
investment is
negligible." Although
recession does not
appear to have any
effect on the prices of
primary articles, it
warned about the
contraction of
demand...
•Region Stock Exchange   Market Value Total
(millions USD Share
Turnover
(millions U
SD
Asia- National Stock Exchange 1,019,109.0 506,652.3
Pacific Bombay Stock Exchange 1,082,572.0 171,176.2
(India) Hong Kong Stock Exchange 1,945,517.7 970,227.6
Shanghai Stock Exchange2,142,756.8 3,315,768.5
NASDAQ 2,847,535.2 19,343,868.
Americas New York Stock Exchange10,842,001.9 3
London Stock Exchange 2,560,491.1 12,158,620.
Swiss Exchange 992,356.4 2,321,518.5
Europe
Euro next 2,605,097.6 520,867.5
Johannesburg Securities Exchange 1,195,962.2
690,797.5
Africa 210,180.8
YEAR
EFFECT ON RAILWAY SHARE
The Auto index has a negative correlation with the stock market.

The sales growth on year on year basis has shown a decline.

Possible causes of weakness in the auto sector:

Negative sales : seeing the higher interest rates which are prevailing in the
banking system of India discourage the consumer.

Increased working capital: slower demand with lag of payments has led to
inventory pileups

The recovery of sector is entirely dependent on the improved liquidity crunch,

availability of credit and improvisation in the demand side with reconstruction of
inventories.
 Passenger cars dipping by 19.38 per cent and commercial vehciles
recording a sales slump of 49.52 per cent.
 The average of all components of the auto sector declined a phenomenal
by 17.98 per cent.

 Total vehicle sales in the domestic market stood at 7,11,281 units in

November as against 8,67,243 units in the same month last year

 Car market leader Maruti Suzuki India sales saw a decline of 24.84 per
cent, whereas Hyundai Motor India Ltd (HMIL), the country's second largest
carmaker also witnessed a fall of 23.32 per cent in its sales

 Two-wheeler sales slipped by 14.68 per cent at 5,67,502 units from

6,65,181 units in the same period last year.
 While Bajaj Auto's sales plummeted by 52.96 per cent at 82,283 units
against 1,74,936 units in the corresponding month last year

 Firms which have cut prices include top carmaker Maruti Suzuki Ltd,
Hyundai Motors India Ltd, Ford India and Hindustan Motors.

 Because of the recession the cash flow and liquidity in the market has
come down considerably. So people are trying to minimize expenditure. As
a result their spending on cars and automobiles are coming down.
 Impact on India
 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.

 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.
• 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.
• What the RBI needs to do, as events
unfold, is to neutralise the outflow of FII
money by unwinding the market
stabilisation securities that it had used to
sterilise the inflows when they
happened.
• This will mean drawing down the dollar
reserves, but that is the logical thing to
do at such a time.
• If done sensibly, it would prevent a sudden
tightening of liquidity, and also not allow the
credit market to overshoot by taking interest
rates up too high.

• The falling rupee (against the dollar, more

than against other currencies) will mean that
exporters who felt squeezed by the earlier
rise of the currency can breathe easy again,
though buyers overseas may now become
more scarce.
 Overheated markets in general (stocks, real
estate, employment-among others) will all
have an element of sanity restored.

 And for importers, the oil price fall (and the

general fall in commodity prices) will
neutralise the impact of the dollar's decline
against the rupee.
 Effect of recession on
Service sector
2007-08

51.1%

26.4%
18.5%

Service Industry Agriculture

Property consisting
of houses and land
Indian economy 'faces slowdown not recession'