wat is recession, why it happens, how it happens.............???

1. A presentation on
Effect of recession on agriculture
Presented By:
Vandana Chandra
MBA
IVth Semester

2. What is Recession……???
 Before, understanding “RECESSION” we need to understand
the market economy:
Two stages of market economy
Two factors of market - demand & supply

3. Two stages of market economy
Growing market economy
Declining market economy

4. Growing market economy
(the upward trend)
Which finally leads to
Stock market rises,
overall
With more money,
Which leads to Investors buy more
Stock & consume
More goods &
services
Investors believe trend
Will continue, so value Which leads to
Of stock increases.
In response to
Increase employment
Increased demand, Which leads to Means even more people
Producers hire more
Can buy stuff.
People & consume
More raw material.
Consumers feel confident
Which leads to In the future of the
Economy, so they buy
More stuff.

5. Declining market economy
(the downward trend)
Which leads to
Consumers do not feel
Confident about the economy,
So they buy less stuff.
In response to decreased
Demand, producers lay
Which leads to Employed workers fear they
Off people & decrease
Will loose their jobs, so they
Consumption of raw mat.
Spend less money.
Unemployed workers have
Less money to spend, Which leads
Which leads to to
So demand decreases
Further.
Investors fear the value of stocks
Will decrease, so they are less Which finally leads to Stock market fails, overall.
Willing to invest in new
companies

6. Two factors of market – demand & supply
 PRODUCERS, wants his demand, to be high always.
 CONSUMERS, wants his buying cost to be low.
Demand is the price at which consumer is ready to buy,
& producer is ready to sell.

7. Recession…..???
 Recession, means the economy is shrinking for two consecutive quarters,
i.e. 6 months, with a decrease in the G.D.P., i.e. Gross Domestic Product.
GDP = Value of all reported goods & services
produced by the people operating in the
economy.
If GDP, is growing, then market is growing due to
Increased demand.

8. Why recession happens…???
Over production Low confidence level

9. Why recession happens…???
Over
production
Pseudo demand
actual need was not
There, wrong A situation in which the supply
Projections. Exceeds the nation’s
Ability to consume what
Has been produced.
Supply > demand
Companies produced
more

10. Low confidence level…
Low confidence Word of mouth
level
Word of mouth
Consumers are fearing that they may loose
Their jobs, so they have less confidence
to spend money & buy goods. This will
Low confidence level
Result in reduction in demand in the
Of millions of
Market. Consumers start saving money
Consumers &
Instead of spending it. This is a downward
Producers after
Trend in the economy
They hear about
The various job cuts,
Demand comes
Producers do not stock material; they
Down, companies
Reduce their production, gets into cost
Become
Reduction activities. They get worried
Bankrupt.
About their profitability.

11. How to know its recession…???
• people buy less stuff.
• decrease in factory production
• growing unemployment
• slump in personal income
• an unhealthy stock market

12. Other indicators of recession….
Pressure on
Population
Food
increasing
supplies
Moves towards Factors that may suggest Inflation,
enclosures that there was a crisis Lower wages
Changes in
Economic
Specialized Climate
farming e.g.
Cloth
industry

13. Developments & difficulties in Agriculture
 Development of specialized farming.
for e.g. dairy farming, which lead to shortages of grain.
 Main shift towards sheep & cattle due to demand for wool & leather. A move
away from grain production, because a profitable situation could be seen in
the production of wool & leather.
 Enclosures seen by the contemporaries as the cause of all the problems of
agriculture. (which include higher grain prices, periodic food shortages, etc.)
 However, other factors like bad weather leading to poor harvests could not
be ignored.

14. Contd…
 Indian agriculture has not impacted by global economy crises, except some
export oriented crops.
 India’s workforce depends on agriculture and he expects a bumper crop this
year and feels it will continue to grow at a robust space.
 About 60-65% of India’s population and workforce depend on agriculture
and agriculture continues to grow at a robust pace.
 The rabi crop is the main agricultural crop in India. In terms of sown area of
wheat; we have already sown 2.69 million hectares as against last year’s 2.19
million hectares on the corresponding date.
 The monsoon had been good.

15. How to come out of recession…???
Fiscal Govt. influences the economy by changing how it (govt.) spends
policy & collects money.
Tax cuts for
More money
Businesses
Available
Or for
For spending
individuals
Individuals Demand picks
More spending
By govt. to
Get salary & Up; market can
They spend Recover.
Create jobs.
money
Some income
Automatic
For
Fiscal policy;
Unemployed
Unemployment
People to
insurance
spend

16. How to come out of recession…???
Monetary Govt. manipulates the available supply of money in the country
policy
More money
Reduce Available
Reserve For banks
ratio To give
loans
Lower the Individuals
Interest Take more Demand picks up;
rates loans Market can
Recover.
It becomes
Use its
An income to
Own
Govt. to
Reserved
Inject money
Money to buy
In the
Govt. bonds
market