Vol : 1 Edtion : 5April 2009

B +ve…..universal motivating factor!!

Unbridled optimistic outlook on life is advised by all, but staying positive in the face of difficulty isn’t allthat easy, opine the ones caught in the whirlpool of trouble. Openness to possibilities, a constructiverational attitude combating dogmatic thinking, an experimental approach with a willingness to takecalculated risks coupled with a sense of personal responsibility can bail us out of complicated situations.History has proved this time and again and we need to believe in uplifting effects of optimism with anactive responsible approach to living in the light of reality. In times of the much talked about recession,optimism becomes an essential ingredient to keep our hope afloat to reach the far-flung shores that weaspire for.Economic slowdown across the globe and recession witnessed in most of the countries has certainlydampened the spirits of all those who are badly hit by the ramifications of the slump. Let us try andunderstand what recession actually is and why many nations are reeling under the pressure of this swirlingcurrent.Before we understand recession, we need to understand certain aspects of market like market economyand market demand and supply. When the consumers are confident in future of economy, they buy moregoods and avail more services. This in turn triggers off an increased demand which would lead to morehiring by producers and consumption of more raw materials. As a result, the employment increases whichenhances the consumers’ capability to buy more, strengthening the investors’ belief that the trend wouldcontinue and hence the value of stock increases. This leads to a rise of over all stock market. Consumers’compliance to buy is the starting point for a growing economy. On the contrary, the same cycle goes in areverse direction when the consumers are reluctant to buy because of the same reasons afore mentionedand the overall stock market falls and this phenomenon leads to a declining economy.Coming to market demand and supply, competitive prices prevailing in the market imply more demand asdemand is not measured in terms of quantity but it is the price at which the consumer is prepared to buyand producer is ready to sell. Recession is the downturn of economy shrinking for two consecutive quarters(=6 months) with a decrease in GDP. GDP stands as a good indicator of economy as it represents the valueof all the reported goods and services produced by the people operating in the country, and so if it’sgrowing, then market is growing due to increased demand. If the recession continues for next quarter (>6 months) then we go through depression economy.Let’s look at the reasons which could cause a recession. It can be traced to either over production or lowconfidence level of consumers. Over production occurs because of pseudo demand where supply exceedsdemand. Low confidence level of consumers could be due to word of mouth publicity as they get to hear job cuts, companies’ bankruptcy etc and start saving money instead of spending money causing a downwardspiral and producers begin cost cutting activities worried about profitability. There might be an effect onconfidence level due to bad incidents happening like, Sep 11 attacks, or Mumbai attacks in India. Therepercussions of such attacks can be seen in Airline and Hotel industries, which in turn can affect the foodcaterers to these industries. If the company decides to lay off people or reduce the salaries, the demandfor goods will go down and people start saving instead of spending. This is an example to illustrate howone industry can hit many other industries when the confidence level of consumers and producers is hit.How do we identify that our economy is into recession? Decrease in consumption of goods and services,slowdown on the production front in the factories, fall in personal income, and an unstable and unhealthystock market. Is there a way to come out of recession? Today it is a free market economy where producerscan decide their selling price and consumers can accordingly take a call to go for them or to refrain frompurchasing them. Hence, government can only influence through its policies. Fiscal policies like tax cuts onbusinesses and individuals, spending more on creating jobs, unemployment insurance etc can help marketrecover as the demand picks up. Monetary policies where RBI reduces reserve ratio, enabling the banks togive more loans. RBI could reduce the interest rates or buy government bonds using its own reservedmoney to help markets recover.

It is important for any nation to wriggle out of recession and put up a healthy stock market. Recession ina country is influenced by the actions of everybody living in that country and so understanding therepercussions of a non spending population is essential.Currently most of the developed countries like US, Japan, Germany are into a recession and countries likeIndia and China are into a slow down stage and not in recession. Let’s stay positive that things woulddefinitely show up and we would be out of recession very soon and get back to our GDP growth rate of 8%to 10%.Padmaja NPrincipal Mentor, SoftSkills.

And God replied….

There was once a man, who throughout his life,Said a prayer which would always be,“Lord, when I’m to leave this world, weary and old”,“It’s you who should come to receive me”Keeping this faith in mind, the man went on a trek,Where he was confronted by a bear,“I must not fear,” said the man confidently,“For I know the Lord is there”Yet even as he said this, the bear steadily approached,“And Lord see to me!” the man frantically cried,But the bear ofcourse leapt and squeezed him hardAnd the man instantly died.“Not fair!” the man howled on reaching heaven“This has been a very bitter lesson I’ve had to learn,”“For all my prayers and faith in you,”“This is what I get in return!”“But my dear child,” said the Lord soothingly,As if quietly taking the blame,“You asked that I come to receive you and so,“With open arms I came!”- Amrita Suresh ( Written when I was 17 )