Published on December 26, 2008
US Recession & its Impact : US Recession & its Impact Varun Aggarwal Nitin Kumar Preeti Kumari Sapna Rana Shashank Rana Vijay Kundra US Recession : US Recession What is recession? How it creeps in the economy? Current Crisis in the US How to fight recession Past recession Impact of a US recession on India What future holds? Sub-prime Crisis : Sub-prime Crisis What is Sub-prime crisis? How it affected the U.S. Economy? Its Impact on other economies of the world? Its impact on India? Do you think India stands to face a very similar crisis if the consumer spending and loans business in India is not kept in check? Benefits of Economic Recession : Benefits of Economic Recession A lot of people think that an economic recession is bad. While that is partly true, there are certain benefits: Opportunities for entrepreneurs to start new business(Low interest rates) Benefits Service class(Tax cuts) Low attrition rate helps companies(cost saving) Increased retirement age Famous who got Bankrupt? : Famous who got Bankrupt? Lehman Bros. Merrill lynch Fannie Mae & Freddie Mac AIG Bear stearns Impact of a US recession on India : Impact of a US recession on India A credit crisis in the United States might lead to a restructuring of asset allocation at pension funds In terms of specific sectors, the IT Enabled Services sector may be hit since a majority of Indian IT firms derive 75% or more of their revenues from the United States--a classic case of having put all eggs in one basket The manufacturing sector has to ramp up scale economies, and improve productivity and operational efficiency, thus lowering prices, if it wishes to offset the loss of revenue from a possible US recession Cont… : Cont… The tourism sector could be affected. Now is the time to aggressively promote health tourism. Given the availability of talented professionals, and with a distinct cost advantage, India can be the destination of choice for health tourism. A recession in the United States may see the loss of some jobs in India. The concept of Social Security, that has been absent until now, may gain momentum The Indian Rupee has appreciated in relation to the US dollarThe Indian central bank (Reserve Bank of India) can intervene anytime and cut interest rates, increasing liquidity in the economy, and catalyzing domestic demand. A strong domestic demand would also help in competing globally when the recession is over How to Face Recession? : How to Face Recession? Tax Cuts Bailout Packages Hike in Government spendings Create more jobs Boost the manufacturing & Services Sector Changes in monetary & Fiscal Policy : Changes in monetary & Fiscal Policy increase borrowing reduce interest rates reduce taxes spend on public works such as infrastructure Poor nations will get less financing for development Depression II : Depression II Depression I Why this is said as depression II? What this depression lead to? -Sharp drop in commodity prices -Contraction in the most wealthy nation -Sharp slowdown in emerging countries -Worldwide investment will fall 50% in 2009 Slide 11: Thank You!