WHAT IS RECESSION ??? Slowdown in economic activities, reduction in demand, fall in prices, closure of business enterprises, and lack of trust in economic system is called recession....
WHY RECESSION.... 1930 fall in real estate prices ... and subsequent failures of banks.... 2008 Fall in real estate prices due to failures of banking system (sub-prime crises)
WHY RECESSION... Excessive credit excessive consumerism lack of risk management measures bubble (excessive increase in stock price, excessive increase in land prices) had to burst
IMPACT OF RECESSION Massive retrenchment / unemployment (in Pune alone more than 50000 people lost their jobs) closure of a large number of companies economic crises in many countries payment crisis in many countries devaluation of many currencies inflation without demand reduced trust in $
SOLUTIONS. . . . Federal Bank, US govt, governments of different countries got united and took initiatives... huge money was pumped into the system.... confidence building measures were taken up... interest rates were reduced.... treasury rate was brought down to ZERO. ... initiatives were taken up to reduce tax rates, to help industries and to introduce relief packages for industries....
SUGGESTIONS .... Prepare for such events in advance ... Improve risk management measures encourage people to save and invest – not just to consume adopt better corporate governance, better accounting disclosure practices establish an international economic monitoring body to guide central banks and governments to tackle such problems....
INDIA – A SAFER COUNTRY ... Banks have adopted prudential measures... banks dont give excessive loans people still love to save and invest speculative activities are comparatively less people have trust in banks (as most banks are public sector banks and are supported by government) and stock market large middle class and good purchasing power only a few industries (BPO, Export oriented units, and financial services) were adversely affected...
SUGGESTIONS... Let us question our economic systems and develop new economic system, which can promote small, micro and tiny units and which can enable our economic system to adopt the principles of Gandhian philosophy... let us again promote our culture of savings, investment and collective institutions.....