Is it Recession or simply a correction for Indian Economy?

People now days are talking about recession everywhere. It has become a talk of town. But what exactly is recession? In economics, the term recession generally describes the reduction of a country’s GDP for at least two quarters while the usual dictionary definition is “ a period of reduced economic activities”, a business cycle contraction. It is visible through real personal income, employment, industrial production and whole-sale retail sale, besides decline in real GNP(GDP+exports-imports).

But is India really going through recession or is it simply correction across all industries?

Sensex……. Correcting itself
Normally, recession starts with the crash in the stock market. The Indian stock market crashed in 2008, but wasn’t it enjoying an unrealistic high? The sensex level of 20000 were unheard until October 2007, making India the 20th nation in the world to have seen its stock market benchmark touch this milestone. It gradually reached its peak in January 2008 touching all time high 21000. But with in 10 days the market crashed by more than 2000 points and downward movement had begun.
But this is not the time to panic. It’s not that people have stopped making money in market, yes they are making money. Remember , ‘for every seller, there is a buyer in the market’

Realty….. the correction has begun
Owning a dream home in India especially in metropolitan cities had become a dream which couldnot be fulfilled by most city dwellers. The reason simply being unrealistic high prices of homes and rising home loan interest rates.
It slowly became a seller’s market and real estate giants continued to construct flats and apartments, but when there are no takers how can they make profits? Thus there needs to be a correction in real estate segment also. What we see today is not a crash in real estate segment, it is in fact a correction. It may be painful for time being but situation would start looking up when other economic factors will boost.

Industries across all sectors………. A correction has begun
Industries across all sectors were enjoying a boom till mid 2008. But various economic factors have put an unwanted pressure on them and a slowdown is seen across all sectors. Be it IT or aviation segment, the effect is everywhere.take the case of aviation industry, when the industry was booming, the players in the segment hired manpower on a large scale at high cost without taking into account cost to company(CTC) and return on the investment(ROI). The industries flourished and so did the employees. But, with the recent slowdown it is becoming increasingly difficult for these players to bear high costs and hence retrenchment.
In fact, industries across all segments, finance, manufacturing are bringing about correction with in themselves.

On a concluding note………..
The global nature of current recession scenario of world economy is bound to affect Indian economy. Our economy is not insulated from these shocks. However the fundamentals of Indian economy are quite strong. We can look at current recession as a correction of Indian economy and start brushing up our basics to emerge as a savior of world economy.