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Project Report on
US Recession and its Impact on Indian Economy

Submitted to
Prof. V.P.Singh

Submitted By
Sona Nair 38 Shrenik Shah Mansi Kinjawdekar 32

Parle Tilak Vidyalaya’s Institute of Management
Dixit Road, Vileparle East, Mumbai-400057

Index| Table of Contents| Page no|
1.| Introduction| |
2.| Factors affecting Recession| |
3.| Impact on Indian Economy| |
4.| Corrective Steps taken to check Recession| |
5.| Case Study-| |
6.| Conclusion| |
7.| Executive Summary| |
8.| Bibliography| |

What is Recession?
A recession is a contraction phase of the business cycle.
The official agency in charge of declaring that the economy is in a state of recession is the National Bureau of Economic Research (NBER). They define recession as a “A period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

This is normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For this reason, the official designation of recession may not come until after we are in a recession for six months or even longer.

Some economists also suggest that a recession occurs when the natural growth rate in GDP is less than the average of 2%. Typically, a normal economic recession lasts for approximately 1 year. The newspapers in America often quote theThumb Rulethat a recession occurs when real gross domestic product (GDP) growth is negative for two or more consecutive quarters.

A recession is a decline in a country's gross domestic product (GDP) growth for two or more consecutive quarters of a year. A recession is also preceded by several quarters of slowing down. Recession is 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, especially 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 people could lose their jobs in the correct fiscal ending March. The one crore figure has been compiled by Federation of Indian Export Organizations (FIEO), which says that it has carried out an intensive survey. The textile, garment and handicraft industry are worse affected. 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 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...
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