The Indian economy is under tremendous pressure and undergoing losses in every sector. Here is what-how-why about the Indian economic recession.
Global / Indian economic recession is one of the hottest topics among everyone today. As most of the people are weak in economics, all of them are wondering what exactly is happening and where are we heading towards.
As a result of increase in oil prices,foreign exchange is flowing from India. People have sold more shares in the Indian market share than they bought in the recent weeks. This has added to the fall of the Sensex to lower points.
About three months back Sensex was at 17000 to 18000 points. But now Sensex points, the indicator of Indian business and economy has fallen below 10000. Yesterday market fell 606 points!!
This is a clear indicator that Indian economy is facing BIG problems.As a result,many companies like Jet Airways,TCS,Satyam and many others have laid off their staffs, the number of foreign tourists to India has dropped down, companies are cutting down compensations and perks etc.
So,is India moving towards ‘Recession’ ?
Inflation is rising due to high oil costs.
One day, Lehman Brothers declared themselves bankrupt. Employees all over the world were laid off. Many others followed – the list is still expanding.
Simultaneously, Home loans became more expensive and nearly impossible to get! The real estate scenario just got worse! Banks are now more worried about their customers defaulting.
Real estate prices have slashed, no one wants to even plan to buy property or even rent one expecting further reduction. Real estate suppliers have left their projects in between due to lack of demand. They have defaulted in paying interest on their debentures and honoring debentures in a timely manner. This has caused many Mutual Funds to suffer losses in the millions.
Due to this poor situation in real estate and construction market, prices of steel and cement are crashing! Absolutely no demand ! Which means a lot of industries are suffering from the slowdown.
The aviation industry is suffering from severe losses! No traffic, high fare prices are all causing this industry to go under the covers.Kingfisher-Jet alliance and Jet airways staff shedding are the results….
With no demand, too many current employees cannot be remunerated with existing revenues. It is indeed a matter of concern, but companies cannot afford to suffer more! Even the cola companies weren’t spared! Recently a Cola company clodes their 5 major Production Companies.
Capital markets are moving towards crash. It seems like there is no tomorrow. FIIs do not want to invest. Finance Minister’s reassurances are of no use. There is panic everywhere. People want their money to be safe.
Banks refuse to lend money to other banks. Even though the government was willing to lend money, banks hardly took full benefits of it.
The Indian Paradox
Inflation reflects high demand with plenty of money and scarcity of supply. On one hand,we’re facing high inflation, which is a sign of growth and on the other hand, we’re heading towards Economic recession. The worst phase of economics – stagflation. It is the worst paradox.
For instance, Iceland, one of the richest country, is bankrupt. A country that survives on imports, has only one day reserve for running the economy. This is global economics. We’re in deep trouble – we’re heading towards a massive depression which will not be restricted to USA only – it will hurt and injure every country and every individual hard.