effects of global recession on india

8/7/2019 Effects Of Global recession on India

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o The global economic recession has slowly been

spreading its bloody tentacles over Indian

Economy. But only nine years into our newcentury, we have encountered our first global

obstacle towards our aim recession.


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In the globalized market scenario, the impact ofrecession at one place/ industry/ sector peculatedown to all the linked industry and this can be truly

interpreted from the current market situation whichis faced by the world since approx 2 month and stillthe situation is not in control inspite of variousmeasures taken to fight backthe recession in themarket.


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The job Market in India is now focusing on

lateral entry though recruitment of freshers

though it's in slow mode. Some ofthe top

recruiters in India however opined that due toeconomic slowdown salary levels in sectors like

software, travel and hospitality have taken a

backseat. In some sectors, professionals are paid

far below the national average.


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Kamal Nath, the Commerce Minister states thatthere is declineof 26% in FDI, which means less funds coming into theeconomy from outside. According to one estimate, the FDI hadswelled over a period oftime and has risen from a dismal 95,639Crore in 2003-04 to rocketing 16,54,949 Crore in 2007-08. Theexternal commercial borrowings (ECB) which had registered30% increase during 2006 to 2007, suddenly showed nosedivein October, 2008, when it declined from 283.49 Crore inSeptember 2008 to 112.52 Crore in October, 2008 showing areversal trend of 30%.


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Figures released by Index forIndustrial

Production (IIP) a week ago stated thatthe

Industrial production has shown negative growth

of 0.4%. The data suggested that in the samemonth of previous year, the growth in Industrial

production had been 12.2%. The figures also

suggested that exceptthe coal, all other key

infrastructure industries like cement, electricity,

finished steel, crude oil and petroleum refinery

products etc. showed growth in decline mode.


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Afterthe stellar 9%-plus growth during 2006-07,Indias 2008 growth forecast has been lowered tobelow 8%. In spite of being labeled as a domestic-demand driven economy resilientto global

slowdown, the recent investment boom and above-potential growth were rather buoyed by benignglobal liquidity conditions. The Oil price shock hasexposed Indias vulnerability with the trade deficit,expected to exceed 10% of GDP while global

financial turmoil and weakening growth prospectshave led to capital outflows and downward pressureon the currency.


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Corporate earnings and apex plans are also at riskamid rising production costs and lending rates,accentuated by global credit crunch and stock market

volatility. The 16-year high inflation is partly led byfood, commodities and fuel price hike butexacerbated by strong domestic demand, pre-electionfiscal spending and credit growth. The Subsidyburden may raise the fiscal deficitto over 10% of

GDP. Further, interest rate hikes will severely impactconsumer spending and private investment so thatonly an easing of global commodity prices will be ablessing.


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Alarmed by rising recession, the Reserve Bank ofIndia (RBI), the countrys central bank, began thefirst of its monetary policy tightening measures. The

RBI increased the benchmark reverse repurchase rateto 3.5% from 3.25%, and hiked the repurchase rateto 5% from 4.75%, stating that controlling inflationhas become imperative. And the RBI must have been

especially troubled by Indias Wholesale Price Index,which zoomed to 9.89% in February, well above thecentral banks stated target zone of 8.5% for March.


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Recession is just a momentary situation not a long

term affair. Last year saw the worse of economy alloverthe world. Lay offs, price-cutting, losing

projects and many more. India, the country which

renders service to almost all great nations in the

world was affected too. Big IT giants and bankslosing money started showing pink slips to its even

experienced employees. We saw the present and

foresee the future even worse.


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MAKING AVAILABLE MONEY FOR PUBLIC SPENDING-

NEED OF PARADIGM SHIFT IN LENDING PATTERN OF

MAJORITY OF BANKS-

UNORGANISED SECTOR NEEDS STIMULUS-

FOOD, SOCIAL SECURITY AND RURAL DEVELOPMENT

SCHEMES

REFORMS IN FINACIAL SECTOR AND MONETARY

POLICIES-ENHANCE PUBLIC SPENDING-. ENHANCEPUBLIC SPENDING-.

ENHANCE PUBLIC SPENDING-.

INDIA SHOULD STAKE CLAIM IN THE EMERGING NEW

GLOBAL FINANCIAL ORDER-


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Indian economy, though in stress, has been doingfairly good, especially in view of prevailingeconomic malady all around. The growth rate isexpected to be 6.5 to 7.5%, if not more. The rate ofinflation has been witnessing downward trend insuccessive weeks and has come down to single digitnumber, it is expected to come down further, thanksto the bold and effective fiscal and monetarymeasures taken by RBI and Ministry of Finance.


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On the whole recession has hit every one ofus

very hard. Even during the hard times some good

things happen and we believe the two we

described above are the good things to happen

during these hard times

Yes Recession is Over, and has come up with

some positive and negative effects.The job Market in India is now focusing on

lateral entry though recruitment of freshers

though it's in slow mode.

effects of global recession on india

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