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wat is recession, why it happens, how it happens.............???

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  1. 1. A presentation on Effect of recession on agriculture Presented By: Vandana Chandra MBA IVth Semester
  2. 2. What is Recession……???  Before, understanding “RECESSION” we need to understand the market economy: Two stages of market economy Two factors of market - demand & supply
  3. 3. Two stages of market economy Growing market economy Declining market economy
  4. 4. Growing market economy (the upward trend) Which finally leads to Stock market rises, overall With more money, Which leads to Investors buy more Stock & consume More goods & services Investors believe trend Will continue, so value Which leads to Of stock increases. In response to Increase employment Increased demand, Which leads to Means even more people Producers hire more Can buy stuff. People & consume More raw material. Consumers feel confident Which leads to In the future of the Economy, so they buy More stuff.
  5. 5. Declining market economy (the downward trend) Which leads to Consumers do not feel Confident about the economy, So they buy less stuff. In response to decreased Demand, producers lay Which leads to Employed workers fear they Off people & decrease Will loose their jobs, so they Consumption of raw mat. Spend less money. Unemployed workers have Less money to spend, Which leads Which leads to to So demand decreases Further. Investors fear the value of stocks Will decrease, so they are less Which finally leads to Stock market fails, overall. Willing to invest in new companies
  6. 6. Two factors of market – demand & supply  PRODUCERS, wants his demand, to be high always.  CONSUMERS, wants his buying cost to be low. Demand is the price at which consumer is ready to buy, & producer is ready to sell.
  7. 7. Recession…..???  Recession, means the economy is shrinking for two consecutive quarters, i.e. 6 months, with a decrease in the G.D.P., i.e. Gross Domestic Product. GDP = Value of all reported goods & services produced by the people operating in the economy. If GDP, is growing, then market is growing due to Increased demand.
  8. 8. Why recession happens…??? Over production Low confidence level
  9. 9. Why recession happens…??? Over production Pseudo demand actual need was not There, wrong A situation in which the supply Projections. Exceeds the nation’s Ability to consume what Has been produced. Supply > demand Companies produced more
  10. 10. Low confidence level… Low confidence Word of mouth level Word of mouth Consumers are fearing that they may loose Their jobs, so they have less confidence to spend money & buy goods. This will Low confidence level Result in reduction in demand in the Of millions of Market. Consumers start saving money Consumers & Instead of spending it. This is a downward Producers after Trend in the economy They hear about The various job cuts, Demand comes Producers do not stock material; they Down, companies Reduce their production, gets into cost Become Reduction activities. They get worried Bankrupt. About their profitability.
  11. 11. How to know its recession…??? • people buy less stuff. • decrease in factory production • growing unemployment • slump in personal income • an unhealthy stock market
  12. 12. Other indicators of recession…. Pressure on Population Food increasing supplies Moves towards Factors that may suggest Inflation, enclosures that there was a crisis Lower wages Changes in Economic Specialized Climate farming e.g. Cloth industry
  13. 13. Developments & difficulties in Agriculture  Development of specialized farming. for e.g. dairy farming, which lead to shortages of grain.  Main shift towards sheep & cattle due to demand for wool & leather. A move away from grain production, because a profitable situation could be seen in the production of wool & leather.  Enclosures seen by the contemporaries as the cause of all the problems of agriculture. (which include higher grain prices, periodic food shortages, etc.)  However, other factors like bad weather leading to poor harvests could not be ignored.
  14. 14. Contd…  Indian agriculture has not impacted by global economy crises, except some export oriented crops.  India’s workforce depends on agriculture and he expects a bumper crop this year and feels it will continue to grow at a robust space.  About 60-65% of India’s population and workforce depend on agriculture and agriculture continues to grow at a robust pace.  The rabi crop is the main agricultural crop in India. In terms of sown area of wheat; we have already sown 2.69 million hectares as against last year’s 2.19 million hectares on the corresponding date.  The monsoon had been good.
  15. 15. How to come out of recession…??? Fiscal Govt. influences the economy by changing how it (govt.) spends policy & collects money. Tax cuts for More money Businesses Available Or for For spending individuals Individuals Demand picks More spending By govt. to Get salary & Up; market can They spend Recover. Create jobs. money Some income Automatic For Fiscal policy; Unemployed Unemployment People to insurance spend
  16. 16. How to come out of recession…??? Monetary Govt. manipulates the available supply of money in the country policy More money Reduce Available Reserve For banks ratio To give loans Lower the Individuals Interest Take more Demand picks up; rates loans Market can Recover. It becomes Use its An income to Own Govt. to Reserved Inject money Money to buy In the Govt. bonds market