IBS TIMES 232nd ISSUE

IBS

TIMES

ISSUE 232nd

IS INDIA IMMUNE TO U.S.A. RECESSION?

Ms.Lebaka Harika (Senior Editor Website)

TEAM IBS TIMES

Mr. Dinesh Reddy Bandi (Editor in Chief)

Mr. Gourav Verma (Senior Editor Magazine)

Ms. Aakanksha Murarka

Mr. Rajat Maheshwari

Ms. Amrita Biyani

Ms. Ava Tripathy

Mr. Bhasker Yadav

Mr. Bhavesh Kataria

Ms. K Suhani Reddy

Ms. Manisha Singh

Ms. Manvi Arora

Ms.Namisha Agarwal

Mr. Niteksh Gupta

Mr.SupratimMukherjee

Ms. Ruma Koley

Mr. Sai Avinash Karri

Ms. Sanghamitra Pati

Mr. Swakrit Banik

Mr. Yash Sharma

Designed By:-

Mr. Gourav Verma

Mr. Dinesh Reddy Bandi

Ms. Lebaka Harika

EDITOR'S NOTE

Finstreet IBS is an ICFAI Business school Hyderabad-affiliated official capital market club which aims to research the capital market as a whole. At IBS Times we serve our readers information from in and around the world and keep them up to date. We try to aid our readers with information and gauge knowledge with better investment solutions. IBS Times encompasses an independent writers club with unbiased thought and wholesome views, fairness, and honesty. We have recognized that our work can influence decisions or perceptions of our readers towards the capital market. Therefore, we commit to publishing our magazines and journals with the highest level of accuracy and impartiality. We strive to be humble and subtle in carrying out this work. Our team realizes that accuracy in the context provided to readers is imperative. Thus, we always strive to reach that level as best as we can.

This Magazine edition focuses Immunity of various sectors of India to U.S Recession. The global economy is interconnected, and a slowdown in the US can have ripple effects on other countries, including India. Weather India is Re-Inforce Global d d f ff ll d l

CONTENTS

IMPACT ON REAL ESTATE MARKET

IMPACT ON HEALTH CARE SECTOR

IMPACT ON OIL AND GAS SECTOR

IMPACT ON FMCG SECTOR

IMPACT ON TECH INDUSTRY

IMPACT ON BANKING SECTOR

IMPACT ON ED TECH INDUSTRY

- Mr. Rajat Maheshwari

- Ms. Ava Tripathi

- Mr. Yash Sharma

- Ms. Namisha Aggarwal

- Mr. Supratim Mukherjee

- Ms. Ruma Koley

Ms Sanghamitra Pati

Impact of US recession on India's Real Estate Market.

By Mr. Rajat Maheshwari .

The Indian real estate industry is one of the largest sectors after agriculture and primary sector in our country. These sectors contribute about 6.5 % to 7 % and it is one of major source of job for unorganized sector of Indian labour market. This sector was one of the main beneficiaries of the post-liberalization periods, where India become one of the hot properties of the foreign direct investment, lot of new ventures open day by day and salaries of Indian middle class increase exponential. Since 1990s it shows a major growth, and Indian metro cities, like Chennai, Mumbai, Hyderabad, Delhi & Kolkata feels the boom in real estate sector. It is also expected that this sector will grab more non-resident Indian (NRI) investments in both the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Hyderabad Chennai, Goa & Delhi.

History of Recession on Real Estate:

The most recent recession, in 2008, was devastating to the real estate industry. Sales fallen, homes went into foreclosure, and the market in general spun into chaos. But buying a home during a recession can lead to a great deal if you know the 2008 recession and housing market crash showed how closely the economy is tense to home prices. Recession of 2008, which lasted from 2007 to 2009.

And the real estate industry was at the heart of that recession, due to subprime mortgage rates. And COVID itself had had an influence on real estate transactions. With stay-at-home mandates in place, you probably were not able to go look at homes. And even if you were able, you might not have willingness to and sellers might not have wanted you in their home. So, less homes are currently on the market.

What happens to house prices in a recession?

As the nation continues its stable march toward progress, fuelled by government spending, private investments in manufacturing, and the geopolitical advantage for India, 2023 will be a crucial year for the Indian real estate market. One of the major challenges being faced for the real estate market in the upcoming year of 2023 is going to be the cooldown effect of the US recession the cost of construction materials has risen dramatically, including key input materials such as cement and steel. As construction costs rise, they will be forced to raise prices and pass the cost on to end users. The increased property prices are expected to lead to an increase in rental prices as well.

Recessions often bring about a fall in property prices. During Australia’s last big recession in 1990/91, property prices fell across the country. In the worst-affected capital city, Melbourne, they were down more than -6%. This time around, some analysts foreshadowed that property prices could fall by as much as -30% if we experienced a severe recession.

However, as Australia looks likely to avoid the worst impacts of the virus a figure of -10% or below is now more widely forecast. If you’re a first home buyer, lower prices are usually welcome news. After all, if property prices were to fall by -10% across the board, that property that once was $600,000 would now be $540,000.

This would mean you need to save $12,000 less to have a 20% deposit for the property (which means $108,000 instead of $120,000). And, if you were borrowing the remaining 80% of the property’s value using a 25-year principal and interest home loan at 3.5% interest, your repayments would be around $240 a month cheaper.

High Demand for Rental Homes

During a recession, most people become anxious, and rightfully so. Due to uncertainty in the air, individuals who had intentions to purchase a home will have reservations due to the income flux. Consequently, rental homes will become the go-to housing medium during this period. Regardless of the increased rental rates that would define this period, people will prefer these real estate assets due to their cost- effectiveness at the time. a recession will see rental payments become higher than income Irrespective of this

troubling fact, residents in big cities should be spared from this increment as they’ll be policies in place to mitigate this act.

Impact on Residential Properties

An imminent US recession in 2023, if it unfolds as it seems possible now, will also impact housing demand in India at least marginally. Reduced flows of IT work outsourced to India and further layoffs will also leave their mark on residential absorption here

Despite recording an upbeat performance in residential properties in terms of sales, the year 2023 will continue to witness controlled supply of new launches in most of the top cities. Ready to move in properties will continue to draw the most demand among homebuyers in 2023. The overall demand for homes will sustain at least in the first quarter of next year and is expected to remain sceptical afterwardslargely depending on a few important factors like repo rate hike and consequently, hiked home loan interest rates. The demand is expected to contract if the home loan interest rate rises above 9.5%.

Conclusion Impact on Commercial Properties:

The commercial real estate sector in India depends heavily on expansion by domestic and international corporate companies, and global recession could have direct and substantial unpleasant effect on the Indian commercial office market. After witnessing a dull year in 2020, the demand for commercial possessions picked pace in 2021 with supply and demand recording a 21% and 34% growth respectively, over the previous year.

The first half of 2022 also remained upbeat with companies started opening their offices, and asking for employees to work from the offices. But the forthcoming threat of recession in the US considerably changes things. Currently, 70% of offices in this country are occupied by foreign companies who focus on cost advantages like subdollar rentals for good quality Grade A offices, and almost 80% lower operating cost per full-time employee in India compared to the tier II cities in the US A recession in US in 2023 will only compound this caution, further slowing down MNC leasing. However, the deals concluded in 2022 offer a sliver of hope.

The Impact of the recession on the Indian real estate market can vary depending on the severity of the recession and the specific market conditions in India at the time. Generally, a recession can lead to a decrease in demand for real estate, resulting in lower property prices and a slower pace of sale. This can lead to decline in construction activity and a slowdown in the overall economy.

Apart from this threat there is a threat of Job losses which may result in fall in real income of people this may lead to fall in the demand for houses. At the same time people whose real income will increase will demand more property, but the group of people whose demand fall will be larger than that of group with who will rise the demand for houses because of the overall slowdown in the economy. However, it’s important to note that the real estate market is a cyclical and may recover once the recession ends.

How the Recession in the USA is Expected to Impact the Health-Care Industry in India

By Ms. Ava Tripathy

It's no secret that the US economy and indeed the global economy isn't in great shape in 2022. With negative growth in the first two quarters of the year and a third quarter likely to follow, the US is now officially in recession. But how will this recession affect the healthcare sector in India, which is already struggling with the lingering effects of the COVID-19 pandemic? The healthcare industry in India includes hospitals, healthcare facilities, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment The industry is growing at a tremendous pace due to strengthening coverage, services, and increasing spending by both public and private entities.

A

hangover from COVID-19

The lasting impact of the COVID-19 pandemic should not be underestimated. A significant proportion of those infected with the virus has long-term effects, including mental health problems, organ damage, and general fatigue. This continues to put pressure on health services. In addition, many people found themselves unable to work and lost their health insurance. Others with pre-existing conditions did not have access to basic treatment during the crisis,

resulting in their conditions worsening. Even in normal economic times, these issues would pose problems for the healthcare industry as a whole, but the recession is expected to make things significantly worse.

Personnel issues

Healthcare workers on the front lines have been hit hard by the COVID-19 pandemic. As a result, mortality and long-term effects were highly prevalent among them. Medical staff has also been under great pressure during the pandemic, leading to increased cases of burnout, and unprecedented numbers leaving the profession altogether. The problem persists, with 47% saying they will leave by 2025. A recession and high inflation will make it difficult to retain these skilled people without significant incentives.

Clinical productivity

Labour productivity in healthcare has declined significantly over the past twenty years, with employee costs rising much faster than overall industry growth. Considerable underutilized capacity was identified in physician schedules, such as

patients not showing up for appointments. Some technological advances can reduce this idle capacity and increase the productivity of the entire industry. EHR systems play a key role here as they reduce the need for repeated patient evaluations due to incorrect diagnoses and medication prescriptions. Of course, the need for increased clinical productivity must be weighed against the risks of burnout for clinicians at all levels, as this could have the opposite effect than intended, increasing the cost of covering burnt-out staff and recruiting new doctors.

Conclusion

In short, the recession presents many challenges to the healthcare industry, with patients unable to afford the healthcare they need, inflationary pressure on budgets, and other employee retention issues. However, if the industry can modernize, and adopt new technologies and work practices, including increased use of electronic systems such as EHRs, these problems can be minimized.

Simplified administration

About a quarter of the money spent on Indian health care currently goes to administration. There are currently efforts to reduce this and we can expect the recession to increase the pressure. Ways to achieve savings include reducing the manual workload of nurse managers and doctors, increasing the use of electronic health records (EHRs) can help with this. In addition to reducing the likelihood of missing notes, they reduce the amount of time spent searching for details and reduce the likelihood of incorrect prescriptions and misdiagnoses. Although there is a cost to implement, EHR systems can provide a significant return on investment by delivering better outcomes for all stakeholders, including patients, providers, and employees.

the impact of the recession in the USA on the healthcare industry in India is complex and multifaceted. The healthcare sector in India is already facing a range of challenges, including inadequate infrastructure, limited funding, and a shortage of healthcare professionals The economic slowdown in the USA is likely to exacerbate these challenges, particularly by putting pressure on healthcare budgets and reducing patient affordability. However, if the industry can embrace new technologies and work practices, there are opportunities for modernization and improved efficiency. For example, the increased use of electronic health records (EHRs) can help reduce costs and improve patient care.

The healthcare industry in India must remain vigilant and adaptable to navigate the challenges posed by the recession, and seize opportunities to enhance their services and create new partnerships that can help sustain the sector in the longterm.

Ultimately, the health and well-being of patients in India will depend on the ability of the industry to adapt to changing economic and technological landscapes, and provide affordable and high-quality care to all.

How USA’s recession can provide relief to Oil and Gas sector ?

By Mr. Yash Sharma

The number of Google searches for the term "recession" has significantly increased since the 2008 global financial crisis. Numerous analysts have projected that the greatest economy in the world, the US, may experience a short-term recession. The likelihood that the US will have a recession within the next year has increased from 15% to 30%, according to Goldman Sachs economists. According to James Gorman, CEO of Morgan Stanley, there is a 50% risk that the US economy will experience a recession In the past three months, the price of crude oil has moderated, with Brent crude oil currently trading at about $86 per barrel. Concerns of a worldwide economic slowdown as a result of central banks' aggressive tightening of monetary policy have led to a decline in crude oil prices Adding to it, ongoing COVID-led lockdowns in parts of China also caused a fall in prices. These factors helped lower energy demand, and with lower demand came lower prices. For a country like India, which imports 80% of its crude oil demand, this is a positive development. If there is a slowdown in the US, prices of raw materials may come down significantly. On the other hand, India will benefit from the recovery in crude prices, as the US is one of the largest consumers of fuel.

2022 recession might provide much needed rebalance

Recession fears are now commonplace, but analysts believe they will not be as severe as the 2008 global financial crisis. Global oil production capacity utilisation rates are at historic lows, putting upward pressure on prices until very recently A recession is needed to restore buffer stocks to more normal levels.

Profit-maximizing Companies do not intentionally invest in growing oil reserves or excess capacity. Instead, oil inventories and reserve capacity unintentionally increase when consumption is lower than expected as the business cycle suddenly slows down.

The recessions of 2001-2002, 2008-2009, and 2020 and the mid-cycle slowdowns of 1997-98 and 2014-15 caused oil and fuel inventories to surge. The opposite is not the case when your business continues to expand rapidly while your inventory increases significantly. Inventory increases only when the business cycle slows unexpectedly, and production capacity slows down as well.

The Government of India cannot reduce inflation by producing more barrels of oil, cubic meters of gas, and megawatts of electricity. However, by slowing the economy, they may restore energy growth to a level that is consistent with the trend in output, replenish inventory, and boost spare capacity to more manageable levels.

Prices may be cooling.

Slower growth in the advanced economies may help reduce crude oil and other commodity prices, reducing the fiscal burden on India. An economic recession significantly reduces government spending. An economic downturn in the West could lower commodity and oil

prices. India's imports of fertilizers and oil will become cheaper as global economies grow more complex.

Meanwhile, petroleum minister Hardeep Singh Puri said today that India would be stepping up its production of crude oil to meet 25 per cent of demand by 2030. Currently, India consumes five million barrels of petroleum daily and imports close to 85 per cent of its total crude requirements

Impact on trade deficit

The surplus of imports over exports is known as a trade deficit. In July 2022, India's trade deficit reached a record high of US$ 31 billion. In the same time period last year, it was $10 billion.

After the US and China, India is the thirdlargest consumer of crude oil. But every year, we import close to 85% of the crude oil we use. A decrease in oil prices benefits India's trade balance as a result. This is due to the fact that imports slow as crude oil prices fall. By doing so, the export-import gap is reduced The currency is also supported by the reduced trade deficit. India's oil trade deficit would be around US$ 140 billion if crude oil prices were to reach US$ 100. India's oil trade deficit will increase by around US$ 15 billion for every US$ 10 increase in crude oil from US$ 100

Conclusion

While a recession in the United States may have a negative impact on the global economy, it may provide some relief to India's oil and gas sector. A recession may help restore buffer stockpiles to more normal levels, so balancing the market and stabilising oil prices. Furthermore, a slowdown in the United States could lower commodity and oil prices, reducing India's fiscal burden and improving its trade balance However, it is important to note that a recession is not a guaranteed solution to the challenges confronting India's oil and gas sector. While lower oil prices can be beneficial to India's trade balance and overall economy, they can also have a negative impact on the revenues of the country's oil and gas companies, potentially leading to job losses and slower economic growth.

Furthermore, it is critical to remember that investing in renewable energy sources and reducing the country's reliance on fossil fuels is the long-term solution to the challenges faced by India's oil and gas sector. The Indian government has already made steps in this direction by setting ambitious renewable energy objectives, and it is critical to continue investing in this sector in order to create a sustainable and secure energy future.

To summarise, while a recession in the United States may bring some temporary respite to India's oil and gas sector, it is not a complete answer to the sector's issues. Instead, the Indian government should prioritise renewable energy sources, infrastructural investment, and laws that encourage sustainable and responsible energy usage. By doing so, India may attain a more resilient and sustainable energy future while simultaneously contributing to global climate change efforts.

How Recession in the US affects FMCG Sector in India

By Ms. Namisha Aggarwal

The US 2022–2023 recession is having a significant impact on the fast-moving consumer goods (FMCG) sector in India. The FMCG sector in India is heavily dependent on exports, and the US is one of the major markets for Indian FMCG products. The recession in the US is likely to lead to a decline in demand for Indian FMCG products, which will have a negative impact on the Indian FMCG sector. One of the major impacts of the US recession on the Indian FMCG sector is a decline in exports.

The US is one of the largest markets for Indian FMCG products, and a decline in demand in the US will lead to a decline in exports of Indian FMCG products. This will result in a decline in revenue for Indian FMCG companies and a decline in employment in the sector

Another impact of the US recession on the Indian FMCG sector is a decline in investment. The US is one of the major sources of foreign investment for the Indian FMCG sector. The recession in the US is likely to lead to a decline in foreign investment in the Indian FMCG sector, which will result in a decline in the growth of the sector. The US recession is also likely to lead to a decline in consumer spending in India. As the US is a major market for Indian FMCG products, a decline in consumer spending in the US is likely to lead to a decline in demand for Indian

FMCG products in India. This will result in a decline in revenue for Indian FMCG companies and a decline in employment in the sector. As businesses raise prices across categories to account for rising input costs, consumption in India's fast-moving consumer goods (FMCG) sector is slowing down. Although price hikes helped the industry grow by 6% in the January–March quarter compared to the prior year, consumers' tightening of their purse strings caused sales volumes to decline by 4%, the most in the previous three quarters.

Due to their inability to pass on the higher input costs to customers, small manufacturers have also left the market in greater numbers (5.3%) as a result of the recession. Manufacturers' input costs are at an all-time high due to labour scarcity and rising gasoline prices Margin losses have been significant as a result, according to Radhey Shyam Dixit, CMD of Ananda Dairy. The price-sensitive rural markets that took the brunt of the greater price rises (11.9% in rural versus 8.8% in urban) were a major contributor to the overall decline in MCG volumes According to Nielsen NielsenIQ research, rural consumption decreased by more than 5% over the period as prices for items like packaged atta, vanaspati, and refined and unrefined edible oil increased by 15%.

According to Satish Pillai, MD, India, NielsenIQ, in continuation from last year, macroeconomic variables are still dictating purchase patterns for the Indian consumer, and they are experiencing the impact of the price increase, notably in the food and basics categories. However, the overall volume degrowth in non-food categories is much greater (-9.6% for nonfood, -1.8% for food). With a volume increase of 1.5% in the food sector, impulse purchases overcame the slowdown blues as customers flocked to smaller packages of salty snacks, chocolates, and confectionery. According to Sanket Ray, president of Coca-Cola operations in India and Southwest Asia, more Indian homes are choosing multipacks to handle rising consumption occasions rather than the massive single units that were previously the standard. Modern trade, one of the major sales channels displayed signs of stabilization with volume growth of 5.3%, while traditional trade experienced volume degrowth of -4.9%, driven by a move toward smaller packs. E-commerce saw 5.6% growth as well.

which was lower than the double-digit growth observed for the five preceding quarters. Dabur India reported a 4% rise in volume, while Britannia Industries Ltd. recorded a 7% increase. Businesses have often underlined the decline in rural demand. Farm revenues have decreased. Consumer confidence is poor. The liquidity crisis is another issue that everyone is dealing with.

Given these elements, it is evident that a rise in demand is not anticipated to occur rapidly. The US recession is also likely to lead to a decline in the value of the Indian rupee. The US dollar is a major currency used in international trade and a decline in the value of the US dollar will lead to a decline in the value of the Indian rupee This will make Indian FMCG products more expensive for foreign buyers, which will result in a decline in demand for Indian FMCG products. The Indian government has taken several measures to mitigate the impact of the US recession on the Indian FMCG sector The government has announced a package of measures to support the FMCG sector, including subsidies for exports, tax incentives for FMCG companies, and financial assistance for FMCG companies. These measures are likely to help the Indian FMCG sector weather the impact of the US recession.

Conclusion

Analysts at Kotak Institutional Equities noted on May 4 that when management like Hindustan Unilever uses the term recession in its remarks in the post-results presser, it often isn't a one-quarter hiccup Both GCPL and Dabur India Ltd 's management remarks lacked inspiration. These two businesses highlighted the demand-boosting necessity of additional fiscal stimulus. HUL's volume increase for the quarter ending in March was 7%,

The US 2022–2023 recession significantly impacts the Indian FMCG sector The decline in demand for Indian FMCG products in the US, the decline in investment, the decline in consumer spending, and the decline in the value of the Indian rupee are all likely to have a negative impact on the Indian FMCG sector. The Indian government has taken several measures to mitigate the impact of the US recession on the Indian FMCG sector, which is likely to help the sector weather the recession’s impact.

Is the U.S. Recession a 'HIT' in the Indian Tech Industry ?

By Mr. Supratim Mukherjee

The recession in the U.S.A. has hit many industries in its own way across the globe. The International Monetary Fund and World Bank are predicting that many third-world countries like India will grow at a steady pace. Forecasts show average data, but sector-specific growth rates have not yet been taken into account. Sectors such as technology, manufacturing, and retail change on many levels.

In an article shared by The Economic Times, some forecasts are based on projections of domestic demand in the economy. The past year has been a rollercoaster for the IT industry. Stocks fell as a result of the recession impacting the United States and, ultimately, the world.

India's IT sector was dominated by companies in the United States and other countries. These companies have started layoffs with the high recession rate sweeping the world. Major companies such as Amazon, Apple, and Microsoft have laid off thousands of employees. With numbers continuing to grow, many Indian conglomerates, such as Tata and HCL, have maintained steady

economic growth despite difficulties. Attributing it to a mere nation is not the only factor. Economic data can only be considered as forecasts. Events like pandemics are always a factor of surprise when it comes to economic change. The economy may continue to develop steadily, but employment numbers will still decline, with some consequences.

Here are the most important industry predictions for 2023: IT

First, 20% to 30% of hiring attempts fail. This big shift is already happening for many companies, and while that window is still quite open, it is projected to close in the next year. Aside from employment, many employees are starting to quit their jobs voluntarily. The reasons for this result are manifold. Western-based companies have been directly hit by the recession and therefore do not offer cost-benefit comparisons. Even now, start-ups are thriving even in a global recession, so they look to recruit interns from the bench. Hence, many people have come to look for freelance jobs in India. On-campus internships are said to be heavily impacted at this stage. Campus jobs are annual rituals for companies to hire more workers to meet growing demand, followed by layoffs. However, during the economic crisis, cutting costs reduces recruitment opportunities. Many work with contract workforce providers who can help treat contract freelancers as bench resources. This is an advantageous technique, and a good technique reduces costs. Mahindra, Wipro, and Infosys recently made the news for revoking a number of freshman appointment letters. This happened after a waiting period of about 3–6 months. The law was heavily criticized, and many authorities questioned the issue. More than 3,000 freshmen suffered, although market leaders were unable to provide a clear reason. The above

incidents demonstrate the lack of confidence in the job market next year, with shifts in expectations and decisions, especially among freshmen.

Tips for balancing the recession crisis with company operations:

Reduce costs associated with the company's business work to improve customer service and employee experience. The goal is to maximize business with current customers. Use technology against cost. The recession the world faced in 2010 was different than it is today. We now have the technology and tools to complete many costly tasks. We focus on customers and employees. needs and deploys the most appropriate tools and technologies. This will be a one-time investment.

Aside from the fact that the global economy is currently under dark clouds, the only bright spot in all these recessions is the need for talent and employment in the IT industry remains unchanged. This is a technology-driven sector characterized by monthly developments and improvements.

The software that was the lifeline of many businesses until last year may now be obsolete. With the development of new technologies, the need for labour remains constant.

Recruitment methods may change due to the need to reduce costs, and there is a shift from hiring full-time employees to hiring freelancers' Job boards are currently flooded with jobs for Java Developer Contracts, React Developer Contracts, PHP Developer Contracts, and iOS Developer Contracts.

These openings clearly show that many businesses are in need of advanced technical support and that a slowing economy cannot change the basic needs for businesses to function.

Now is not the best time to take risks. The aim is to create a healthy balance and ultimately set realistic goals for the company. Forecasts show growth potential, but next year will be very slow.

Therefore, exceeding the possibilities only jeopardizes the business. Focusing on stability over big numbers should be your company motto. Focus on getting the job done rather than on who is doing it. Many companies get bogged down by the idea of recruiting the best freshmen from top universities. You need a competitive package to do the same, but your business may not be able to offer it. This limits your resources. The key is hiring staff to act as support when new goals need to be met. Although India is not primarily a direct target of the recession, many market leaders who were targets during this period have operations in India. Therefore, the Indian economy is directly or indirectly affected. But not being directly involved in this crisis is a gateway to growth. Moderate growth will look huge after the recession clouds dissipate. So now is the time to act smart and ruthless and focus on stability rather than lofty goals.

How Recession in the USA will affect Banking Sector in India

By Ms. Ruma Koley

“The financial crisis and the Great Recession posed the most significant macroeconomic challenges for the United States in a half century, leaving behind high unemployment and below target inflation and calling for highly accommodative monetary policies.”

Jerome Powell

Asignificant, prolonged, and widespread downturn in economic activity is called a recession. Although recessions may last for a small period, like a few months, the economy may not recover to its former peak for years. It is measured by economists at the NBER (National Bureau of Economic Research) with the help of nonfarm payrolls, retail sales, and industrial production, among other indicators, going far beyond the simpler two-thirds of negative GDP measures.

History of Recession in the USA and its Effect on the Banking Sector:

In the USA, there have been as many as 48 recessions dating back to the Articles of Confederation. Between 1945 and 2001, the average duration of the 11 recessions was 10 months; between 1919 and 1945, it was 18 months; and from 1854 to 1919, it was 22 months. No post-World War II era had come anywhere near the depth of the Great Depression before the COVID-19 recession began in March 2020, which lasted from 1929 to 1941 because of the 1929

stock market crash and other factors. The banking sector was affected again and again due to those recessions. After the Bank War in 1836, the Second Bank lost its charter, and until 1862, there was no national presence in banking. At the time, there was neither a central bank nor deposit insurance. During this time, definitions were contested, and unemployment and GDP were not collected, according to modern economic statistics. After the COVID-19 recession, all countries are trying to overcome that terrible situation. But the current scenario has changed while showing the data of the US economy, which is already slowing, and by companies warning about the impact of inflation and supply chain problems on their operations. For this reason, Wall Street worries that the rate hikes could go too far in slowing economic growth and pushing the economy into a recession. Not only in the USA but also in Britain, economic contraction was evident. Even China and the Eurozone are still not out of the pandemic. China is weighted down by successive lockdowns in its large cities. Both China and the USA are currently running a slowdown. So, we can say that when two of the biggest economies in the world face such a situation, the fears of a recession are valid. and it will affect developing countries like India.

Current Situation:

India’s current position:

As per India’s report, at the end of June 2022, GDP (gross domestic product) will have jumped 13.5%, which is 2.7% points lower than the RBI (Reserve Bank of India) projected. GDP rises but stays below estimates. The Reserve Bank of India had projected a growth rate of 16%.

There was some expectation of a more significant amount back from the first 6 months of the last year when the delta wave of Covid-19 came and the economy was crippled by that. Therefore, the GDP numbers came out as a disappointment for most.

But, analysing the graph, we can see that last year, India’s GDP showed a massive jump to 20.1%. It’s showing the fastest growth in a year.

But somehow, we can see a slowdown in the pace of growth momentum, which shows GDP decelerating further in the quarter to come.

Potential Impact in India on the US Recession:

I. Merchandise exports can fail:

As we know the US is one of India’s major trading partners and its share market in India’s merchandise exports was at 18.1% in the financial year 2022. As a result, Software exports can be the worst hit in India.

II.Interest

rate

trajectory: According to the record and the Nirmal Bang report showed that due to the recession, there has a maximum possibility of a slowdown of growth in every sector as well as the banking sector which affects Interest rate hikes also.

GDP growth may slow: RBI and the Fed:

India is not immune to a US recession, and domestic growth, which slowed by approximately 1.5% to 2.5% even in normal Fed-led recessions, is suggested in a report by the Securities and Exchange Commission. According to the paper, "In our base case, we believe that GDP growth will be 5% in the fiscal year 2023, assuming a mild US recession," and growth could even slow down to 6% in the financial year 2024 (revised down from 7% earlier)”. For example, if we look at Point 021, it suggests that even a shallow, short recession in the US has the potential to bring down GDP.

According to the report, India’s rate-hike cycle has never gone in the opposite direction to that of the Fed. There were extended pauses in the 1970s and 1980s when the Fed raised and cut rates.As well as in the early 1990s, the RBI maintained a pause. But in the 1990s, the RBI, the Fed, and even the Fed itself remained on pause. In conclusion, we can say that, as per the report, the worst of the FPI outflows from Indian equities may be largely over; therefore, FPI flows are likely to resume gradually, which may limit the depression pressure on the rupee.

World recession effect on Ed-Tech industry in India

By Ms. Sanghamitra Pati

The effects of the global recession, which, according to economist Nouriel Roubini, will begin by the end of 2022 and last until the end of 2023, will undoubtedly have an impact on India. Lower commodity prices, on the other hand, would mitigate the negative effects of the recession on the economy. From the United States toEurope, the Middle East to South Asia, every country is feeling the effects of Russian President Vladimir Putin's unprovoked attack on Ukraine. In addition to the deadly effects of the COVID-19 pandemic, the world has reached a tipping point due to the most recent geopolitical disaster. Global central banks have become overly aggressive in their efforts to control inflation. As the pandemic waves recede, India's EdTech startup landscape begins to unravel. With the opening of new schools and colleges, the demand for online tuition has dwindled dramatically, affecting the revenue of these companies significantly in recent months. These companies have been hit the hardest of all startups, as funding has dried up due to the recession, among other factors, forcing them to lay off employees.

According to a survey, Indian startups have already laid off nearly 10,000 workers this year, accounting for roughly one-third of those in the EdTech sector The pandemic aided the growth of EdTech startups in India over the last two years, transforming India into the world's EdTech hub as education went online. Indian EdTech startups

raised $4.7 billion in 2021, up from $2.2 billion in 2020, making EdTech the thirdmost funded start-up category, trailing only e-commerce ($10.7 billion) and FinTech ($8 billion).

Now, if we talk about EdTech companies or startups in India, they have been the hardest hit. And not even only the EdTech companies but the education industry in total. Apart from being declared, there is a sudden decline in EdTech funding as well as EdTech operations, which is a megatrend in the overall industry. Investment in Indian startups as a whole dropped from $12 billion in Q1 2022 to $7.86 billion in Q2. In addition, total funding was less than $1 billion in July, the lowest in the previous 15 months.

In 2020 and 2021, edtech companies broke all fundraising records. Startups at all stages, from pre-product to late-stage, successfully raised back-to-back rounds. Byju's, Unacademy, Vedantu, UpGrad, Eruditus, ClassPlus,

BrightChamps, Cuemath, LEAP, and Teachmint ranked first and second, respectively, in the list of startups raising funds in 2020 and 2021. Companies like Unacademy, Vedantu, Teachmint, and BrightChamps are just a few examples of those that have recently announced funding rounds. But, layoffs and shutdowns are telling a story now, which is alarming. While all startups experienced layoffs in 2022, a disproportionate number of ed-tech companies reversed their rapid expansion by laying off workers to save costs and extend their runway. According to multiple media reports, Byju's and Unacademy each laid off over 1,000 employees in 2022. Both companies, however, claimed that the layoffs were less than 500 and 600, respectively. Byju’s-owned Toppr fired 350 employees, while WhiteHat Jr. fired 30, and there was also a mass resignation of more than 1,000 staff members. Another unicorn unveiled 724 employees in three phases. In the previous several months, edtech companies laid off between 3,000 and 400,000 people. The numbers could be larger. Aside from mass layoffs, startups in Lido, Udayy, and Crejo have been laid off. FuCrejo.Fun,er, learn, shlear, shut down operations

several years, their rapid expansion was achieved at a plainly unsustainable cost, particularly in light of the recent financing crunch. Over hiring was a key culprit. Before the layoffs, Unacademy and Vedantu combined to employ nearly 6,000 people. Over 12,000 people work at Byju's, according to estimates. They lost a lot of money in FY20, FY21, and FY22 due to overstaffing and other factors.

Most FinTech startups lose a lot of money and even close down during a recession. While ed-tech businesses were able to expand during the last

What adds more to the pain is that the government of India has also started shifting its attention toward EdTech companies. Dharmendra Pradhan, the education minister, recently stated that the central government is working on a policy to regulate edtech platforms. While not quite as drastic as China's approach of seeking only non-profit firms in the sector, there is no doubt that the government will oppose any form of profiteering. Anil Sahasrabudhe, Chairman of the All India Council for Technical Education (AICTE), stated earlier this year that edtech companies cannot be allowed to venture into areas outside their domain, such as offering diploma and degree courses. He also stated that postgraduate management and computer application programs can only be offered by universities and approved colleges. No matter how fancy startups sound and look, they are the ones who are facing and will bear the major pain due to the US recession.

How has the world recession affected the Aviation industry in India?

By :- Ms. Aakanksha Murarka

“A recession is when you have to tighten your belt; depression is when you have no belt to tighten. When you've lost your trousers - you're in the airline business.” –

Adam Thomson

Arecession is a period of decreased economic activity. It is usually marked by a decrease in GDP, increased unemployment, and decreased investment. A recession can be caused by a number of factors, including a decrease in consumer spending, a decrease in business investment, or a decrease in exports.

How

The aviation industry is greatly affected by recessions. When economies are doing well, people have more money to spend on travel and airfare. When economies are doing poorly, people have less money to spend on travel and airfare. Airlines must then compete for a smaller pool of customers, and fares drop to attract passengers. This can cause airlines to lose money, as they have to charge lower fares to remain competitive but still incur the same costs, such as fuel and labour. Airlines may also have to lay off workers, ground planes, and reduce flights in a recession. This can lead to a decrease in the quality of service and an increase in the number of delayed or cancelled flights.

What are the consequences of a recession on aviation?

A recession can have a number of consequences for the aviation industry. For one, a recession can decrease passenger traffic as people have less money to spend on travel This can lead to airlines having to reduce their flights and capacity, which can in turn lead to job losses in the aviation industry. Additionally, a recession can lead to a decrease in the value of airline stocks, making it harder for airlines to raise money to finance new aircraft or expand their businesses. Finally, a recession can lead to a decrease in the number of people who choose to become pilots, as flying can be seen as a luxury that people are less likely to afford during tough economic times.

How does the recession compare to previous downturns in aviation?

There have been a few notable downturns in aviation throughout history. The recession of the early 1990s was a difficult time for the airline industry, as was the dotcom bust at the beginning of the 21st century. However, the current recession has been particularly harsh on airlines. In terms of revenue, the industry is down about 20 percent from its peak in 2008. The number of passengers has also declined, with a drop of about 10 percent in 2009. This is in sharp contrast to the previous recessions, which saw only modest declines in airline traffic.

does a recession affect the aviation industry?

One of the reasons for the more severe downturn this time around is the increased competition from low-cost carriers These airlines have been able to expand rapidly in the current recession, as consumers have been looking for cheaper alternatives to the major carriers. In addition, the global economic slowdown has led to a decrease in business travel, which is a key source of revenue for the airline industry Despite the difficult conditions, there are some signs of hope for the aviation industry. Airlines are starting to return to profitability, and the number of passengers is beginning to rebound. It will likely be a while before the industry returns to its pre-recession levels, but there is optimism that the worst may be behind us.

What is the outlook for aviation during and after the recession?

While the recession has significantly impacted the aviation industry, there are indications that the industry is starting to recover. Airlines are seeing an increase in passenger demand, and many are reporting profits. This is good news for the industry, as it indicates that people are starting to travel again. However, there are still some challenges that airlines face, such as high fuel prices and the need to invest in new technology.

The government should take steps to revive the aviation industry in India. One way to do this would be to offer tax breaks to airlines. This would help to reduce the cost of air travel and could stimulate demand for air travel. Additionally, the government could increase the number of airports in India. This would make it easier for people to travel by air and would help to increase the revenue of the aviation industry.

Overall, the recession has had a significant impact on the aviation industry Airlines have had to reduce their prices and capacity in order to stay afloat, and many have gone bankrupt. While the industry is starting to recover, it is still facing some challenges. The number of passengers traveling by air has decreased as airlines have had to reduce their fares and make cuts to their staff. This has led to a decline in the overall revenue of the aviation industry.

FINANCIAL TRIVIA Money For Thought

The impact of a US recession on India can be significant due to the close economic ties between the two countries. India is heavily dependent on exports, and the US is one of its major trading partners, so a recession in the US can affect Indian exports to the US, leading to a decline in demand and revenues for Indian businesses. Additionally, a US recession can also lead to a reduction in foreign investment in India, which can slow down the country's economic growth This is because foreign investors tend to pull out their investments from emerging markets like India during times of economic uncertainty, and instead invest in safer assets like US government bonds. Furthermore, a US recession can also impact the Indian economy through the financial sector, as many Indian banks and financial institutions have exposure to US financial markets. If the US financial markets experience a downturn, it can lead to losses for Indian financial institutions, potentially leading to a credit crunch in the Indian market. Overall, a US recession can have significant ripple effects on the Indian economy, leading to a decline in exports, foreign investment, and potentially leading to a slowdown in economic growth.

The IBS Times is an academic print and not for any commercial sale. Reliability and responsibility for sources of data for the articles vests with respective authors. Please feel free to drop any suggestions or any feedback at editor.ibstimes@gmail.com IBS Times - FinStreet, The official Capital Market Club of IBS Hyderabad All