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Recession 2009

The official definition of recession is ‘when the gross domestic product (GDP) of a
country declines for two or more consecutive quarters of a year, the condition is known
as recession’. Normally, even before recession is declared officially, the economy goes
through slow down for several quarters. So what’s the reason behind recession?

The answer lies in fundamentals of economics which says that, whenever an economy
goes through several months and years of economic growth, the slowdown is inevitable.
Growth period normally lasts for 6-10 years whereas recession is for a period of 6 months
to 2 years.

The current world economy has definitely entered into recession. The most powerful
economy USA is going through recession and that has affected other economies as well.
India is witnessing slow down and lower GDP growth projection but as a country it is yet
to enter into recession. The big economies that enjoyed uninterrupted growth and
development for decades are facing lack of demand from consumer side.

The average spending by consumers has decreased drastically. With less demand there is
bound to be less production and rising unemployment condition. Many industrial and
corporate houses are churning their workforce.

Stocks markets and share trading are major indicators of economy trend. A rising
economy is always well reflected on the bourses. Shares prices of many renowned
companies have touched the rock bottom in the current economic turmoil. Indian stock
exchange has also lost more than half of its value in a period of 8-9 months. Most of the
world economies including India are declaring bail-out packages for doomed industries.

Several high-flying companies have come back to earth, battered and bruised. Big shots
names in financial world have gone bankrupt or acquired by other companies or
nationalized. The housing bubble has sent many private equity investors into tailspin.
Things are definitely not rosy as can be witnessed from falling crude prices, reducing
exports, low inflation and decreasing demand from consumers.

Tackling recession 2009


by mohamed meeran (View MyPage) on Aug 20, 2009 01:56 PM

Recession is nothing but somewhere a large amount of money has accumulated to a


limited hands. So, suddenly there is a cash starvation everywhere.

In India to tackle this recsssive situation, the first and foremost thing is cut in commercial
lendig rates to keep up the money supply at the adequate levels in the market. So,
reducing intrest rate on loans will be a big boosting factor to survive in this recession. So,
RBI has to act fast in a way by liberalising lending rates.
Construction is another important activity for stabilization and growth. So, there should
be less interest rate loans and a bit more incentives to promote construction sector. Some
strong indigenious growth oriented decisions are required, because less exports and less
salalry for NRIs may contribute less US$ to the economy.

Another one Infrastructure which has to be develpoed in a massive scale keeping in a


mind that the publis has to fell pride and comfort using public mode of transport. Which
shall pave the way on reduced usage of Oil.

There should be a strict cap on FDIs as the wealthy cash rich groups could expoloit the
situation.

Media has to play very responsible role to maintain is exaggerating the situation.

Recession: India's prospects in 2009


December 11, 2008 12:34 IST

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The global financial and economic crisis keeps getting worse. A couple of weeks back
the giant Citibank had to be bailed out with several hundred billion dollars in cash and
guarantees from the US authorities ("Citi never sleeps"…but apparently its management
dozed off during some crucial decisions last year).

Last week America reported November job losses of more than 530,000, the biggest
single month figure since 1974, taking the US unemployment rate to 6.7 percent, the
highest in 15 years.

The US, Eurozone, UK and Japan [ Images ] are now officially in recession, in the sense
of having experienced two successive quarters of negative growth. Several analysts
predict that the rate of contraction of the US economy in this final quarter of 2008 may be
at an astonishing annual rate of 4 to 5 percent.

Similar pessimism pervades the other two largest economies in the world: Europe and
Japan. There is enormous uncertainty about the depth and duration of the current global
recession. But the majority of expert opinion now concedes a substantial likelihood that
this will be the worst recession since the Great Depression of the 1930s.

Both the severity of the financial crisis and its massive collateral damage to the real
economy have confounded the optimists over the past year. Quite often, experts claimed
that "the worst of the financial crisis is behind us", only to be bush-whacked by the next
big bail-out or credit seizure.

Equally remarkable, and much worse in impact, has been the speed at which the
cumulating financial crisis has throttled real economic activity since summer 2008. The
rapid onset of recession in industrial (advanced) countries has clearly overwhelmed the
forecasting abilities of many institutions, including the IMF.

As recently as July this year, the IMF foresaw the world economy growing at 3.9 percent
in 2009, advanced economies at 1.4 percent and developing countries at 6.7 percent. By
early November (just four months later) these forecasts had been slashed down to 2.2
percent, minus 0.3 percent and 5.1 percent, respectively.

Global meltdown: Complete coverage

For its projections of US economic growth in 2009, the IMF swung from plus 0.8
percent in July to minus 0.7 percent in November! And it's a safe bet that if the IMF were
making a fresh set of projections for 2009 today, all these numbers would look even
worse.

Nor does the recent "advance release" of the global outlook for 2009 by UNCTAD
provide any succour. Like the IMF, the UNCTAD foresees global growth at just over 2
percent in 2009 at PPP weights and at only 1 percent at market exchange rates. The latter
number means that global growth in 2009 is expected to be at only about a quarter of the
pace enjoyed in 2006 and 2007.

Both institutions forecast severe damage to world trade, which is expected to expand at
only 2 percent in 2009 as compared to over 9 percent in 2006 and 7 percent in 2007. For
the Asian giant, China, both the IMF and UNCTAD expect growth to slow to about 8.5
percent in 2009 from the scorching 12 percent pace of 2007. Interestingly, several China-
based analysts foresee much sharper deceleration.

What about India [ Images ]? How bad will it get for us? The official estimates of GDP
growth for the first two quarters of 2008/9 stayed above 7.5 percent. However, industry-
wide indications after September are uniformly gloomy.

There are reports of significant declines in output of automobiles, commercial vehicles,


steel, textiles, petrochemicals, construction, real estate, finance, retail activity and many
other sectors. Exports fell by 12 percent in dollar terms in October and advance
information points to a similar decline in November. After September, the economy
seems almost to have gone over a cliff.
When available, the official data are likely to record a sharp slowdown in the second half
of the year, possibly steep enough to drag full year growth in 2008/9 to below 7 percent.
What's more, given the strongly recessionary conditions expected to prevail in the world
economy in 2009, there is no prospect of a quick turnaround in India. Indeed, on a
tentative basis, I would suggest that we might be lucky to achieve GDP growth of even 6
percent in 2009/10.

What about economic policy? Can we not deploy monetary, fiscal and exchange rate
policies to insulate our growth momentum from adverse external conditions? The short
answer is: only to a limited degree. I outlined the main arguments last fortnight (BS,
November 27).

Monetary policy had already been aggressively loosened by early November and the RBI
provided a further, well-balanced package last Saturday, notably including a 1 percent cut
in the repo and reverse repo rates.

Given the continued high rate of CPI inflation through October (latest data) and, perhaps
more significantly, recent pressures on the exchange rate, the present scope for further
policy rate reductions appears limited. That situation might change if external imbalances
improve if a falling oil import bill and slowing non-oil imports outweigh the drop in
export earnings and if capital flows stabilize.

On the fiscal front, the government had pretty much exhausted the available fiscal space
through its record Rs 237,000 crore (4.5 percent of GDP) supplementary demand in
October. Though undertaken for quite different reasons, its timing may turn out to be
quite fortunate.

Against this background the government was wise to limit last Sunday's "fiscal stimulus"
to a modest affair, totaling only about Rs 30,000 crore (Rs 300 billion), out of which two-
thirds was for "additional plan expenditure", which may not be fully spent this fiscal year.

It may be far more important to actually spend the already budgeted plan expenditure
effectively. If international oil and fertilizer prices stay at present levels, implying low or
negligible subsidy rates (looking ahead) on price-controlled domestic sales, then there
may be a case for a larger stimulus next year. Much will depend on the trajectory of
revenues and other expenditures in a slowing economy.

While such unprecedented monetary loosening and massive supplementary expenditures


will definitely help, they will not fully neutralize the negative impact of the severe global
financial and economic crisis on India's exports, investment and consumption.

With over 60 percent of global GDP having toppled into recession, a significant
deceleration of India's economic growth is simply unavoidable. After all, we share the
same planet as America, Europe and Japan (and a rapidly slowing China). In this context
a 6 percent economic growth in 2009/10 will be pretty good...if we achieve it.
Impact of global recession on India
America is the most effected country due to global recession, which comes as a bad news
for India. India have most outsourcing deals from the US. Even our exports to US have
increased over the years. Exports for January declined by 22 per cent.
CJ: Sonia Verma

Sat, Feb 07, 2009 17:53:18 IST


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RECESSIONS ARE the result of reduction in the demand of products in the global
market. Recession can also be associated with falling prices known as deflation due 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.

Recession in the West, specially the United States, is a very bad news for our country.
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 per cent.
There is a decline in the employment market due to the recession in the West. There has
been a significant drop in the new hiring which is a cause of great concern for us. Some
companies have laid off their employees and there have been cut in promotions,
compensation and perks of the employees. Companies in the private sector and
government sector are hesitant to take up new projects. And they are working on existing
projects only. Projections indicate that up to one crore persons could lose their jobs in the
correct fiscal ending March. The one crore figure has been compiled by Federation of
Indian Export Organisations (FIEO), which says that it has carried out an intensive
survey. The textile, garment and handicraft industry are worse effected. Together, they
are going to lose four million jobs by April 2009, according to the FIEO survey. There
has also been a decline in the tourist inflow lately. The real estate has also a problem of
tight liquidity situations, where the developers are finding it hard to raise finances.

IT industries, financial sectors, real estate owners, car industry, investment banking and
other industries as well are confronting heavy loss due to the fall down of global
economy. Federation of Indian chambers of Commerce and Industry (FICCI) found that
faced with the global recession, inventories industries like garment, gems, textiles,
chemicals and jewellery had cut production by 10 per cent to 50 per cent.

How to tackle the global slump?

“Our economy is shrinking, unemployment rolls are growing, businesses and families
can’t get credit and small businesses can’t secure the loans they need to create jobs and
get their products to market,” Obama said.
“With the stakes this high, we cannot afford to get trapped in the same old partisan
gridlock.

Recession in 2008! Depression in 2009


2008-12-16 09:12:59
Last Updated: 2008-12-16 10:07:50
recession

As 2008 entered its final month, predictions of where the world


economy is heading turned dire. The World Bank projected world
output to grow by a mere 0.9 per cent in 2009 (compared with 2.5 per cent in 2008 and a
high of 4 per cent in 2006) and world trade to contract by a significant 2.1 per cent
(compared to positive rates of growth of 6.2 per cent in 2008 and a high of 9.8 per cent in
2006). Moreover, the World Bank could identify no possible driver for a recovery in the
coming months.

Slideshow of the day: Smart phones for work and play

Other projections are even more pessimistic. Chapter 1 of the UN’s World Economic
Situation and Prospects 2009, released in advance at the Doha Financing for
Development conference, estimates that the rate of growth of world output which fell
from 4 per cent in 2006 to 3.8 per cent in 2007 and 2.5 per cent in 2008 is projected to
fall to -0.5 per cent in 2009 as per its baseline scenario and as much as -1.5 per cent in its
pessimistic scenario.

Jobs lost till now!

Finally, the recently released preliminary edition of the OECD’s Economic Outlook for
end-2008 shows that GDP in most OECD countries declined in the third quarter and is
likely to fall also in the fourth. In the event, GDP growth in the OECD area which fell
from 3.1 per cent in 2006 to 2.6 per cent in 2007 and 1.4 per cent in 2008 is projected to
fall to -0.4 per cent in 2009, and the unemployment rate which rose from 5.6 per cent to
5.9 per cent between 2007 and 2008 is expected to climb to 6.9 per cent in 2009 and 7.2
per cent in 2010.

Recession picture

If these predictions turn out to be true the prognosis is that what was a recession in 2008
could turn into a depression in 2009. Looking back, 2008 was a year when the recession
unfolded. The recession in the US, reports indicate, is not recent but about a year old and
ongoing.
Special: The Great Crash of 2008

Short term indicators are disconcerting, but do not convey the real picture. Preliminary
estimates of GDP growth in the US during the third quarter of 2008 point to decline of
half a percentage point. But GDP growth during the previous two quarters was positive at
2.8 and 0.9 per cent respectively.

Images: Global leaders vow to fight financial crisis

The only other quarter since early 2002 when growth was negative was the fourth quarter
of 2007. Thus, going by the popular definition of a recession – two consecutive quarters
of decline in real gross domestic product – the US is still to slip into recessionary
contraction.

Images: Revisiting the 'Great Crash of 1929'

But the independent agency which is the more widely accepted arbiter of the cyclical
position of the US economy is the Business Cycle Dating Committee of the National
Bureau of Economic Research.

Images: FAQs on the US turmoil

This committee, which adopts a more comprehensive set of measures to decide whether
or not the economy has entered a recessionary phase, has recently announced that the
recession in the US economy had begun as early as December 2007. That already makes
the recession 11 months long, which has been the average length of recessions during the
post-war period.

Images: Origin of sub-prime crisis

There is much pessimism on how long this recession would last as well. According to the
OECD, for most countries “a recovery to at least the trend growth rate is not expected
before the second half of 2010 implying that the downturn is likely to be the most severe
since the early 1980s, leading to a sharp rise in unemployment.”

Images: The $700-b bailout czar

In fact, differential in the distribution of the impact of the recession and a recovery in
2010 are the only positive elements in analyst predictions. Most predictions, as for
example that of the World Bank, hold that the decline in growth rates in emerging
markets would be much less than in the US.

Images: Financial crisis glossary

Thus, growth in developing countries as a whole is expected to fall from 6.3 per cent in
2008 to 4.5 per cent in 2009, only to recover to 6.1 per cent in 2010. This is mainly due to
China and India without which the figures are a more disappointing, but still relatively
creditable 5, 2.9 and 4.7 per cent respectively.

Images: Stock indices at multi-year lows

In fact, expectations now are generally that developing countries would grow at relatively
high rates in normal times. Thus, Hans Timmer, who directs the bank’s international
economic analyses and projections, is reported to have declared: “You don’t need
negative growth in developing countries to have a situation that feels like a recession.”

However, even here, the numbers are proving to be disconcerting. China’s growth has
been slipping even if still relatively high. But nobody can ignore the fact that
manufacturing, which is the engine of growth in that country, is hugely dependent on
exports to developed country markets, especially the US.

Second, according to Bank of Korea estimates, South Korea’s economy will contract in
the last quarter of 2008 and grow at its slowest pace in 11 years in 2009.

According to its estimates, the economy, the fourth largest in Asia, would shrink by 1.6
per cent in the fourth quarter of 2008, and grow only at 2 per cent in 2009, and 3.7 per
cent for full 2008. And the month-on-month annual rate of growth of India’s Index of
Industrial Production fell by 0.4 per cent in October, for the first time in 15 years.

Recovery prospects

These developments make predictions of a significant growth recovery in 2010 appear


optimistic. A question that troubles analysts is how long this recession will last. The
recovery assessments are based on the assumptions that the crisis in financial markets
would be resolved soon and that there would be no negative feedback loops both between
the real sector and the financial sector (which would exacerbate the financial crisis) and
within the real sector (which would intensify the crisis in the real economy), before the
positive effects of intervention by governments materialise in full.

Such assumptions are indeed tenuous, increasing the lack of certainty about a recovery.
Thus, job losses in the US are increasing the number of housing foreclosures. Around 7
per cent of mortgage loans were reported to be in arrears in the third quarter, and another
3 per cent are at some stage of the foreclosure process.

According to the Mortgage Bankers’ Association, about 2.2 million homes will have
entered foreclosure proceedings by the end of this year. This would intensify the financial
crisis as well as dampen consumer spending, and could worsen the downward spiral.

Yet, unemployment figures suggest that at the moment the recession is only intensifying.
On December 5, 2008, the Bureau of Labour Statistics in the US reported that employers
had reduced the number of jobs in their facilities by 533,000, taking the unemployment
rate in the US to 6.7 per cent. This reduction –which is the highest monthly fall in 34
years – comes after job losses of 320,000 in October and 403,000 in September.

Total job losses through 2008 are 1.9 million. This means that the 2.5 million jobs that
President-elect Obama is promising to deliver through his fiscal stimulus package would
just about recover the jobs lost during the recessionary period preceding his swearing in,
and leave untouched the backlog of unemployed and those entering the labour force
during this period.

Origins of the crisis

While 2008 was the year of crisis, the origins of this crisis go back to the middle of 2007
when evidence that homeowners who had borrowed to finance the property they
purchased had begun defaulting on their debt. Soon it became clear that too many people
with limited or poor creditworthiness had been induced to borrow large sums by banks
eager to exploit the large amounts of liquidity and the low level of interest rates in the
system.

An unsustainable proportion of defaults seemed inevitable. What was disconcerting in the


events that followed was that this “sub-prime” problem soon spread and created a
systemic crisis that soon bankrupted a host of mortgage finance companies, banks,
investment banks and insurance companies, including big players like Bear Sterns,
Lehman Brothers and AIG.

The reasons this occurred are now well known. The increase in sub-prime credit occurred
because of the complex nature of current-day finance that allows an array of agents to
earn lucrative returns even while transferring the risk. Mortgage brokers seek out and find
willing borrowers for a fee, taking on excess risk in search of volumes.

Mortgage lenders finance these mortgages not with the intention of garnering the interest
and amortisation flows associated with such lending, but because they can sell these
mortgages to Wall Street banks.

The Wall Street banks buy these mortgages because they can bundle assets with varying
returns to create securities with differing probability of default that are then sold to a
range of investors such as banks, mutual funds, pension funds and insurance companies.

Needless to say, institutions at every level are not fully rid of risks but those risks are
shared and rest in large measure with the final investors in the chain. And unfortunately
all players were exposed to each other and to these toxic assets. When sub-prime defaults
began this whole structure collapsed leading to a financial crisis of giant proportions.

The crisis had a number of consequences in the developed countries. It made households
whose homes were now worth much less more cautious in their spending and borrowing
behaviour, resulting in a collapse of consumption spending.
It made banks and financial institutions hit by default more cautious in their lending,
resulting in a credit crunch that bankrupted businesses. It resulted in a collapse in the
value of the assets held by banks and financial institutions, pushing them into insolvency.

All this resulted in a huge pull out of capital from the emerging markets: Net private
flows of capital to developing countries are projected to decline to $530 billion in 2009,
from $1 trillion in 2007.

The effects this had on credit and demand combined with a sharp fall in exports, to
transmit the recession to developing countries. All of these effects soon translated into a
collapse of demand and a crisis in the real economy with falling output and rising
unemployment. This is only worsening the financial crisis even further.

More India business stories

A crisis of this nature requires holes to be plugged at many places simultaneously. While
there is wide agreement that what is needed is a globally coordinated and huge fiscal
stimulus, the actual effort on the ground remains fragmented and meagre. Because of this
results are disappointing, threatening to make this crisis the most protracted in a long
time.

Year 2008 is likely to be remembered as a year in which a crisis of immense proportions


unfolded.

Indian Economy 2010 Overview: Development in the Global


Economy Post Recession.
Tuesday, 12 January, 2010 VMW Leave a comment Go to comments

Global Economic recession is fading and the recovery process from the damages is
entering another year. Year 2009 gone well thru our expectations and year 2010 is
knocking for the faster and stable recovery.

Introduction to Study –

It’s almost a decade since we entered into the 2000s. Economic growth in these
years wasn’t so impressive for the western economies. It proves to be one of the worst
economic period for those economies. Indeed, the so-called fastest growing economies
(such as India, Brazil, China, Mexico, Russia, and Indonesia) have seen an
unprecedented economic expansion because, the eastern economies were the producers
and the western economies were the consumer and the same trend would likely to
continue as the companies, nowadays, are more conscious about the cost. Rising input
cost (or raw material) are forcing the corporations in the industrialized economies to shift
their focus on the cost-effective region to keep up the pricing competitiveness in the
specific industry, they are in. Change in consumer trend is also major concern for the
companies to invest more in the process of innovation, research and development
(R&D).

As the economic pace is picking up, global commodity prices have staged a comeback
from lows and global trade has also seen a decent growth over the last two years.
Unprecedented Government intervention and exceptionally large interest rate cuts by the
central bank in advanced and emerging economies have contributed a lot to pull the
global economy up from the deepest recession since the World War II. Several
Governments around the world launched the stimulus packages to prop up the economic
growth, generate employment opportunities and the overall economic growth with the
aim to reduce uncertainty in the economy and increased confidence. In this
VMW research, we’ll discuss about the overall economic prospect for the year 2010 and
the how the Indian Economy emerge from the ongoing economic repairment.

Economic Prospect For Year 2010 -

Global economy is seems to be expanding after a recent shock. Indian Economy,


however just felt the blow of the global economic recession and the real economic growth
have seen a sharp fall followed by the lower exports, capital outflow and corporate
restructuring. It is expected that the global economies continue to stay strong in the short-
term as the effect of stimulus is still strong and the tax cuts are working. Due to strong
position of liquidity in the market, large corporations now have access to capital in
corporate credit markets.

India’s Economic Outlook Projection

2007 2008 2009 2010

GDP
9.40% 7.30% 7.60% 8.30%
Growth
CPI 6.40% 9.30% 5.50% 4.90%

Year 2009 has started on the gloomy note, however the trend reversed from
the first quarter of the year, financial markets posted strong gains fueled by huge amount
of capital inflows which was set-aside during the economic downturn in search of a
higher yield. Number of companies jumped into the equity markets to raise funds to de-
leverage themselves, corporate risk have declined. Before the beginning of the economic
recession, several companies betted on the better economic future and blindly raised
funds thru various options (largely in a way of debt). Real Estate was the hardest hit
industry during the recession. Many companies even offloaded their huge amount of
stake, in order to meet the deadline to pay-off the short-term debt. Not only the realty
companies which has faced that situation, actually many Small & Medium
Enterprises (SMEs) have opted that option to expand themselves aggressively and
routed out of the business. As the new year begins, the new wave of optimism has
surrounded the economies to expand further from the recent shock, with the expectations
of fresh stimulus package, shrink in unemployment rate, expectations of the high
inflation, higher interest rates in the emerging economies. Over the next few months,
inflation would be a worrisome for the economies. According to the estimates, inflation
would likely to reach up to 10%, resulted, the expectations of the monetary policy
tightening from the Reserve Bank of India in the second quarter review of monetary
policy. Asian economies – Chinese economy in particular, along with India are in the
strongest place for a sustained recovery. There are increasing signs of a recovery in a
private domestic demand.

Inflation Direction -

Since the global economies are emerging from the lows, in a short run, inflation is
expected to rise due to bounce back in demand for commodities. Although, the
underlying inflation are still on the downside. Higher unemployment rate in the west will
lead to low wage growth and pricing power would be limited for a long time as demand
will be very vulnerable to price rises. But, India would buck the trend in inflation due to
ample amount of liquidity in the system and rising demand.

India Economy 2010 Overview -

In order to keep the economic growth during the time of worst recession, Federal
authorities in India has announced the stimulus packages to prop-
up the economic growth. To finance the stimulus packages, Indian Government has
raised over $100 billion over the last four quarters in a way to finance the stimulus
package. Country’s Public debt, according to the latest data has zoomed to over 50% of
the total GDP and India’s Central bank, Reserve Bank of India has started printing new
currency notes.

Central Government Debt


in Rs. Crores (10 Million) Q3 2008 Q3 2009 % of GDP

Public Debt (Sum of 1 and 2) 2,099,286.23 2,505,450.74 50.71%


1. External Debt 237,351.77 294,941.67
2. Internal Debt 1,861,934.46 2,210,509.07
Going forward, India will see sharp rise in supply side inflation, after the effect of large
government borrowings, printing of new currency notes, rise in food prices due to huge
gap in demand-supply. Interest rates will also expected to rise awkward, as the central
bank will take precautionary measure to contain inflation rate and expanding money
supply.

For the equity markets, investors are still in a quest for a higher return and turned down
their investments in Government Bonds/Securities. There are a lot of money which are
still available to readily invest into the equity markets. Indian financial
markets expected to be range-bound as the fear of higher valuation would be the concern
for a short while. Moreover, volatility is expected to come down as the market
timings have been extended by an hour in parallel to the other Asian equity markets. This
will help the Indian markets to hit newer highs which, we have waited for more than two
years. There is no extra concern on the front of equity markets, as the
Equity, nowadays, considered as the best asset class to invest in, the main reason would
be the overstated potential of precious metals like Gold and Silver, which has seen a
sharp rally last year, in a time of gloomy economic picture.

Stability in the Global Economy Means Expansion of the Indian Economy -

All of us have seen an unprecedented government intervention during the economic


recession by way of announcing huge amount of stimulus package for the economy to
prop-up domestic demand. With many recovery tools were used during the crisis,
government deficits are in deep red and central bank rates are almost zero in certain
countries and the prospect of zero rates over a longer period and deflationary concerns
will probably gain the upper hand and send bond yields lower. Hence, there is a low
scope of further announcement.

As far as the Indian economy is concerned, is suffering from huge debt to GDP
ratio, moreover India is the largest net importer of commodities like Oil, Food, metal in
relation to the GDP. Sharp decline in oil prices, could cut the subsidy burden and those
savings would be use for the fiscal stimulus. Increased and better expenditure with
greater focus on improved outcomes in social and physical infrastructure, and safety nets
will speed up the recovery consistent with the long-term growth.

Please read our latest Research on the Indian Economy ”Economy in 2010: Indian
Economy To Grow 10 per cent By The year 2012. and Latest VMW’s Research on the
RBI’s Annual Monetary Policy. to get to know to the future inflation outlook and
interest rates

recession
Hide links within definitionsShow links within definitions

Definition
A period of general economic decline; typically defined as a decline in GDP for two or
more consecutive quarters. A recession is typically accompanied by a drop in the stock
market, an increase in unemployment, and a decline in the housing market. A recession is
generally considered less severe than a depression, and if a recession continues long
enough it is often then classified as a depression. There is no one obvious cause of a
recession, although overall blame generally falls on the federal leadership, often either
the President himself, the head of the Federal Reserve, or the entire administration.

Read more: http://www.investorwords.com/4086/recession.html#ixzz2jErdDnAW

What is the true meaning of Recession?


by ARC IDEA CO for News to Use October 09, 2008

We all use the word 'recession' and we heard of it a lot these days as credit crunch and
financial woes sets in. Stock markets are always in red rather than in the green. Ever-
declining charts for shares are setting the investors around the world into a state of panic.
Many people have been using this word, but only some actually knows what it actually
means.

What does recession actually means?

The given definition of recession should be a substantial decline in activity across the
economy, lasting a longer period which is usually more than a few months. The activity
across the economy are reflected by various economic data like, industrial production,
employment, gross income and wholesale-retail trade. From a technical point of view, a
recession happens when there are two consecutive quarters of negative economic growth
as measure by a particular country's Gross Domestic Product (GDP). Usually recession
last from 6 to 18 months.
So stock markets falling relentlessly does not necessary means that the economy is
undergoing a recession. But recession however is something that cannot be avoided as it
is considered as a part of the business cycle. For obvious reason, it is also the most
dreaded and hated part of a business cycle.