Recession in India vs Recession in USNSB by jitu bordoloi(NSB)

8/14/2019 Recession in India vs Recession in USNSB by jitu bordoloi(NSB)

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ecession in india vs ecession in us

: - .ubmitted to prof sridevi



q WHAT IS RECESSION?WHAT IS RECESSION?



Ø Share marketØ

Ø IT and real estate sector Ø

Ø Layoffs & unemploymentØ

Ø Industrial sector

q ANATOMY OF ECONOMICANATOMY OF ECONOMICDEPRESSION IN INDIADEPRESSION IN INDIA



US faced major crisis because of –

Ø Subprime mortgage crisis ( home loan defaults). Sub-prime is a high risk debt offered to people with poor credit worthiness or unstable incomes.Major banks have landed in trouble after people could not pay back loans.

Ø

ØØ Rising oil prices at $100 a barrel :Ø Foreclosures spread like wildfire putting the US economy on shaky ground.

This, coupled with rising oil prices at $100 a barrel, slowed down thegrowth of the economy.

ØØ Global InflationØ

All this slowed down the growth of the economy and as the GDP growth ratefell to 2%, recession set in.

q US CRISIS HITS INDIAUS CRISIS HITS INDIA



The falling rupee (against the dollar, more than against other currencies)will mean that exporters who felt squeezed by the earlier rise of thecurrency can breathe easy again, though buyers overseas may now

become more scarce.

Ø High unemployment rates : In February, 63,000 jobs were lost, a 5-year record.

Ø In September, 159,000 jobs were lost, bringing the monthly average to84,000 per month from January to September of 2008.

ØOn September 5, 2008, the United States Department of Labor issued areport that its unemployment rate rose to 6.1%, the highest in five years

q CONTD…CONTD…

http://en.wikipedia.org/wiki/United_States_Department_of_Labor

http://en.wikipedia.org/wiki/Unemployment_rate

http://en.wikipedia.org/wiki/Unemployment_rate





q LOW GDP GROWTH INDICATING RECESSION IN USLOW GDP GROWTH INDICATING RECESSION IN US



Ø The general consensus is that a recession is primarily caused by the actions taken to control the money supply in theeconomy

Ø

ØThe Federal Reserve is responsible for maintaining an ideal balance between money supply, interest rates, and inflation.

Ø

Ø When the Fed loses balance in this equation, the economy canspiral out of control, forcing it to correct itself.

q CAUSES OF US RECESSIONCAUSES OF US RECESSION



Ø Relaxed policies in lending practices making it easy to borrowmoney

Ø

Ø The economic activity became unsustainable resulting in the

economy coming to a near halt.Ø

Ø Recession can be caused by factors that stunt short termgrowth in the economy, such as spiking oil prices or war.

q CONTD…CONTD…



A slowdown in the US economy is bad news for India because:Ø Indian companies have major outsourcing deals from the

US

Ø

Ø India's exports to the US have also grown substantially over the years.

Ø

ØIndian companies with big tickets deals in the US are seeingtheir profit margins shrinking.

q IMPACT ON INDIAIMPACT ON INDIA



Ø US recession may be a boon for Indian offshore softwarecompanies

Ø

Ø The impact of recession is higher to small and medium sized(SMEs) enterprises whose bottom lines get squeezed due tolack of spending by consumers

Ø

Ø SMEs in the US are under severe pressure to increase profitability and business margins to survive. This will forcethem to outsource and even have M&A arrangements withIndian firms.

q OPPORTUNITIES IN INDIA DUE TO USOPPORTUNITIES IN INDIA DUE TO USRECESSIONRECESSION



Ø India is going to be a great beneficiary of this trend which willminimize the impact of the US recession on Indian industry

Ø

Ø By March 2008, India had received SME outsourcing dealsworth $7 billion from the US as against $6.2 billion in the

previous year

q CONTD…CONTD…



1. JITU M. BORDOLOI

2.3. SHRUTIDHARA DAS

4.5. JAVED

v PRESENTED BY:-PRESENTED BY:-

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Recession in India vs Recession in USNSB by jitu bordoloi(NSB)