The world has suddenly plummeted into a deep economic crisis (called Global Meltdown or Financial Tsunami), the worst ever since the 1930's. It has almost taken all the countries across the globe into its grip. Almost all the sectors of economy with varying degrees have caught business by surprise during the current global downturn with so much swiftness that every day has become a question of survival. Organizations are grappling with low demand of their products, manufacturing plants are kept idling, export markets are dying, job markets are being annihilated everyday and the symptoms of slowdown are getting starker and starker with every passing day of downturn phenomena. Definition:
A recession is a decline in country's gross domestic product (GDP), in other words, it is a suspension of growth for a period of two or more consecutive quarters of a year. It simply means 'not so much cash in hands' to play with as before resulting in harsh measures like cost cutting, lay-offs etc. A recession normally takes place when consumers loose confidence in the growth of the economy and spend less. This leads to a decreased demand for goods and services, which in turn leads to a decrease in production, lay-offs and a sharp rise in unemployment. Investors spend less as they fear stock values are likely to fall and thus stock markets fall on negative sentiment. Impact of Recession in Developed Countries:
More than half of the world's economy has shrunken and among them USA- the citadel of capitalism and free market has suffered the worst. In the first ten months of 2008, there have been 1.2 million job losses in the USA and the economy has suffered heavily due to financial crisis resulting in global credit squeeze. "There is a real risk that millions will be thrown back into poverty." (Dominique Strauss- Khan, MD, IMF) In present situation down fall in one sector leads to a negative impact on the other sector, thus altogether everyone feels the impact of the financial crises with the result of the current recession which started in US and slowly and gradually due to linked global world has impacted everyone. Recession in India:
In the beginning, the mandrians of Indian Economy were skeptical and unwilling to accept the effect of recession on Indian economy. But historically, slowdown in developed economy has affected emerging economy like India in two fronts: First, USA is India's largest trading partner. Exports are showing the signs of flagging, customers have started canceling orders and payments are not made on time. Secondly, the financial linkage it has with India may take a severe turn because of prolonged recession. "A crisis of this magnitude is bound to affect our economy as it has. International credit has shrunk, with adverse effect on our companies and banks". (Dr Manmohan Singh, Prime Minister of India) The road ahead: the Real Challenges:
The immediate challenge is how to bail out Indian Economy from further slips into a deep and long recession. Many stimulus packages are being announced by multicultural organizations to salvage economic slowdown, but, how far it will save us, the time will speak. "We must accept that we are part and parcel of Global Economy. The global boom drove up our growth to 9% and the global slump has lowered it to 5%. We must abandon the illusion that we can somehow grow fast again while the rest of the world stagnates. We must learn to live with global downswings and rid out the storm. We can not end the storm on our own; we must patiently wait for it to subside. This crisis was not caused by us and can not be solved by us. Our role is to rid out the storm." (Mr. S Ankelswar Ayir in SWAMINOMICS)
HR functions at cross Road
Recession has brought an era of gloom and doom for HR and in the present scenario it is buzzing with terms such as lay-off, cost cutting,...