Winning Bizness Desk

Mumbai. Due to rising inflation and continuous increase in interest rates, the risk of economic recession is deepening in America and European countries. Many economists said that Europe is going into recession. At the same time, there may be a recession in America by next year. If there is a recession in America, it will affect all the countries of the world. There is a danger of increasing inflation and unemployment due to recession. People's income decreases and due to the impact of the economy, there is a continuous decline in the stock market.

How does an economic recession take place?

When GDP growth in a country's economy decreases for two consecutive quarters, it is technically called recession. In other words, if instead of growing, the economy starts falling and if this trend continues for several quarters, then the situation of economic recession starts forming in the country. In economic recession, people are short of money and try to reduce their needs. The result of this is that the demand starts decreasing in the market and the sales of the products goes down. In such a situation, it is natural that when the demand is less, then the production will also be affected, so the company will want to keep the employees according to its profit, due to which the retrenchment of the employees starts, due to which lakhs of people become unemployed.

Stoppage of money flow or investment

The main reason for economic recession is the stoppage of money flow or investment, because the purchasing power of the people decreases, as well as the investment coming from inland and abroad also decreases. Crude oil prices increase in the international market, due to which the inflation rate increases further and people are not able to buy the things they need. The decreasing value of rupee against dollar is also the main reason for this. During the recession, due to the decline in exports compared to imports, the country's fiscal deficit increases and there is a decrease in foreign exchange reserves. However, even at present, speculation about the recession has continued. But it is less likely to have a direct effect on India. It is believed that the global economy like America, Europe and China will go into recession. Many economists and industrialists have expressed the possibility of economic recession in the world till next year.

India has seen 4 economic recession so far?

India has seen a total of four recessions since independence. RBI's GDP growth figures confirm this. It came in the years 1958, 1966, 1973 and 1980.

• 1) In 1957-58 India's GDP growth rate went into minus. This year the GDP growth rate was recorded at -1.2 percent. The main reason for this was the huge increase in import bills.


• 2) Due to severe drought and famine in the financial year 1965-66, India's GDP growth again went into minus.


• 3) The condition of recession of 1973 was created due to the oil crisis. The Organization of the Petroleum Producing Arab Countries (OAPEC) had banned the export of oil to all the countries that sided with Israel in the Yom Kippur War. Due to this, the prices of oil had increased up to 400 percent for some time.


• 4) Due to the Iranian Revolution in 1980, there was a big blow to oil production all over the world and due to this there was a recession in India this year. During this also the prices of oil imports increased wildly.