Recession is defined as a significant decline in a economic activity spread across the economy lasting more than few months. During recession employment, investment spending , household incomes,profits from business all fall during this period of recession.It is generally said that recession in simple words means widespread drop in spending money.The major firms through out the world started cutting salaries of their employers, many individuals left their jobs .During the period of recession (G D P)growth was less for few months.During this period at starting there were some positive results but they didn’t last long there place was taken by some negative results.Many firms have decrease their the employment level and started cutting salaries.Production of goods was also badly effected .People during this period were unable to save money what ever they earn it was all spent on fulfilling their demand.Business firms reduce their goods prices and faces a lot of loss as consumer was unable to buy costly things.This fall in price leads to increase the demand of the goods.Even the real estate industry was also badly effected by recession .Recession even leads peoples to sell their homes to make up for financial instability .Due to this increase in supply of properties during period of low demand , the prices of properties are slashed considerably.Recession have lead an bad impact over stock market.Many people sell their stokes at same time.
CAUSES OF RECESSION
There are various causes of recession ;
1.increase in interest rate
2 .fall in consumer confidence
3.firms reduce their output
4.unemployment level has increased
5. cutoff of salaries of workers
1.INCREASE IN INTEREST RATES:At the time of recession banks have increased their interest rates .This effect the peoples badly they were unable to take loans from banks as the interest rate was very high by the banks so this lead to receesion ..
2.FALL IN CONSUMER CONFIDENCE:At the time of recession consumers loose their confidence. The prices of the goods rise and demand of goods get less which effect the supply of goods badly .This was the one of the main reason for the rcession.
3.FIRMS REDUCE THEIR OUTPUT:When consumers reduce the demand of goods as the price was high then producers reduce the production of goods of the which became the reason for recession..
4.UNEMPLOYMENT LEVEL WAS INCREASED:At the time of recession unemployment level was increased .All the workers working were removed from their jobs and were made un employed .Removal of workers increased the level of un employment which became an one of the factor for recession.
There were some events which cause economic recession and laid bad impact over various industries and firms.The firms have reduced their production level.The firms face a lot of loss as they have decrease their price of goods .Firms also raised the level of unemployment at that time which effected a life style of workers working in firms .They were unable to lead their life as their was no way of earning for them.
CUT OFF SALARIES:When recession occur salaries of an employees were cut of by the employers .They were removed from their posts and was provided very less salaries which was not sufficient for them so they were leaving their jobs in search of other jobs which provide them gud salary..
Recession is the period which can,t be avoided it growth.The main reason of recession is the decrease in rate of GDP which will have periods of high growth ,medium growth and at last low is due to decrease in manufacturing orders , housing rates,unemployments etc.Decline in stock market is also the reason for recession .The reason for recession in 2001 was that there was economic boom in computer and softwear.At that time demand of computers were at high rate in1999 but in 2000 the demand falls but the company has bought all the equipment they would need.This lead to stock market sell off in march 2000 so this lead to recession in 2001.
High rate of interest
High rate of interest was one of the main reason of recession .When in 2000 stock market falls then to save themselves from facing loss they increase their interest rate and didn’t take steps to lower the rate of interest which became the reason for recession in 2001.
BENEFITS OF RECESSION
As we know that recession leads an bad impact on economy beside this there are some benefits of recession .There were various bad impact of recession like it leads to inflation,loss of work, unemployment ,cut off salaries etc.but leaving this there are some benefits also which are as follows:
1.increased money supply by the government.
2.decrease in tax rate.
3.FALLING HOUSES PRICES.
1.INCREASED MONEY SUPPLLY BY GOVERNMENT:When recession occurred government start producing more and more currency so that poverty can be removed from our country.If the government print more money as it is demanded than it may create inflation in the country.At that time price of goods were increased and wages of workers were reduced.
2.DECREASE IN TAX RATE: At the time of recession tax rate was reduced by the government .This was helpful for the people of India .Import duty was also reduced by the government .People can easily do their business without any restriction.Sales tax was also reduced and it became helpful for the people who all have to purchase or sell their hoses.
3.FALLING HOUSES PRICES :At the time of recession price of house fall .There was more people to sell their house but very few were there who want to purchase .As according to law of demand price should be less to increase the demand of product, this benefits fewer people than increasing prices.
SOME RECESSION PROOF INDUSTRIES
TURBINE AND TURBINE GENERATORS
As we know recession leads worst effect over industries .Turbine and Turbine generators is one of the example of these effected industries. Their demand was 6% in 1999,12%in the year 2001,and 2% in 2007.Their demand decreased as the economy was effected.The prices of generators was very high which affected the business of generators.
MEDICINAL AND BIOLOGICAL PRODUCTS
Boasting 7%,2%,5%,the medicinal and biological products were at great demand because at time of recession most of the people get sick at that very time.At that time demand of medicines was very high mostly people used to take medicines and cost of those medicines was also very high..
SECTORS AFFECTED BY RECESSION
SECTORS AFFECTED LEAST:
1.FOOD MANUFACTURING
2.HEALTH CARE
3EDUCATIONAL SERVICES
4.SKILLED SERVICES
5.TRANSPORTATION
6.REPAIRS AND MAINTENANCE
1.HEALTH CARE:At the time of recession most the people suffer from different types of diseases so due to this demand of medicines was also very high.One of the main cause was poverty .Hunger ,disease ,and less education describes poverty of a peson .At the time of recession health care sector was least affected ..Price of medicines was high but still the demand of medicines was not affected.Mostly national burden of health care is taken upby private health providers .About 67%of gdp came from private sector and rest from government.Wheter there is rain or not ,recession or depression people will get sick .
2.EDUCATION SECTOR:
Literacy rates at time of rcession was equal ..Rate of men and women were equal on both sides .About 2.5%of gdp rate was spend for education.Severl government agencies were there who
contribute for education. People used to send their children very less to schools because people were very poor they were not having enough money to spend on their children for studying in school.Teachers as we know didn,t earn good salary but even that they earn respectable salary.So recession didn’t affect the education sector.
FOOD MANUFACTURING: Food manufacturing was the sector which was least affected by the recession .During recession the demand for food was not affected badly whereas the demand for food increased more than it was before recession. About 923 million people undernourished people right now,hence it has increased demand of food during recession also. So carrer in food manufacturing industry is much better than any other industry as food is only thing without which live didn’t sustain in this world.
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TRANSPORTATION:RECESSION Also laid less impact on transportation sector. India manufacture most of motorized vehicles like cars jeeps ,trucks,vans,buses and wide range of two wheeler vehicles .Indian scooters have good market in foreign market. When there was recession demand of vehicles was not affected. Many people was kept to job related to transportation .This was the only way for people to move from one place to another at the time of recession.
REPAIRS AND MAINTENANCE:Commodities related to air conditioned,blowere and refrigerators mechanics are also not affectecd by the recession and they earn easily their livelihood at the time of recession.There was also no tension to plumbers at he time of recession as their work was not affected during the recession.
SECTORS BADLY AFFECTED
There are various various sectors which are badly affected by recession.So at the time of recession there were very less carriers in these fields.These sectors are as follows:
1.CONSTRUCTION
2.SECURITIES AND INVESTMENTS
3.BANKING ARE USUALLY HARDEST HIT in RECESSION
CONSTRUCTION:Construction sector was one among hardest affected sector.The study found that near about 7,000construction firms faced insolvency between the second half of 2008.As construction firms were one which provide capital goods but due to recession they have reduced this and faced a lot of loss.
SECURITIES AND INVESTMENT SECTOR : During the time of recession stock market falls ..People stop buying goods from the market and earnings to them were very less..Companies also reduce their production of goods. Investments were at high rate during the recession .Profit in real estate come from cash flow.Gold also became precious at the time of recession. Real estates and fast moving goods suffer a lot during recession.
BANKING SECTION :At the time of recession jobs were cut due to slowdown. Its the public sector undertaking banks which gained much confidence. More and more people were liked to go to public sector.They like to move towards government sectors. Recession affected the cash flow of industries. Industries were unable to raise funds for the expansion and growth then industrial output will come down.
SECTORS WHICH ARE RECESSION PROOF: There are various sectors which are recession proof but 3 main sectors are.
1.communication sector
2.heath care sector
3.debt reduction and collection
These the sectors are recession proof .All these three sectors are affected by recession .Health care sector was not badly affected but it was least affected where as communication sector is also least affected wireless phones become demand of today at the time of recession it was not affected. By thse cell phones only business at the time of recession stand and was not affected. Where as third sector is also affected people used to borrow a lot at a time of recession Business opportunities include debt relief counseling programs.
HOW SUCH SCENARIO COULD HAVE BEEN AVOIDED:At the tome of recession we know there was loss of lot of jobs but fiscal stimulushad reached consumers quickly it would have been resettled recession at that time helping to stabilize housing market.
STEPS WOULD HAVE BEEN TAKEN TO AVOID RECESSION:Interest rates would have been increased when old recession was starting to lift .If it not htan it should have been put normal.
2.Stop the wholesale business at the time of recession.
3.jobs opportunity facilities would have been increased at the time of recession.
4.Investment should be done in some infrastructure like roads,bridges etc.
4.Price of goods would have been decreased.
WHAT WE CAN DO FOR FUTURE:
Economists may say we are in recession but they can’t say that they are in depression but psychologically many are suffering from depression.
Steps that should be taken:
1.Keep your health fit by eating properly,exercising daily,.Fun is also important in our daily busy life.
2.Never make rash decisions about your finances.
3.The resources which are scare should be used properly ..Peoples should have proper use of such resources.
4.Today we can see that workers today are much more as compared to jobs.Under this economic system peoples should consume more and more just to maintain jobs in future.
Outsourcing employment problems requiresrequiring even more consumption to make up for dis appearing jobs.
5.Longer vacations also create unemployment in today’s world.
6.New goalsand mechanismsmust be developedthat puit the long termwelfare of the planet,people ,and communities,under short term profits.
7.When ever we are free we should meet the other members of the company.
8.Rate of gdp should also be increased of the country which is also very important to have control on recession in future.
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