What is recession? Recession is defined as a consequential reduction in economic activity, throughout a country, existing at least for few months. The dwindling in various parameters like Gross Domestic Product(GDP),capacity utilization, business profits, employment opportunities, household incomes, investment spending, inflation, net export activity and government spending all bear testimony to this declivity. The attributes of recession are leading to bankrupt and enhanced unemployment rate.

A fettle fall of GDP, of about 10% or a recession extending for three or four years is coined to be an ‘economic depression'. Recession may be classified into different shapes like, V-shaped, U-shaped, L-shaped and W-shaped recession.

Recession is usually preceded by a period which experiences a drastic fall of spending, due to a sudden lull in supply, or because of shattering of an economic bubble. According to economist Richard C'OOK at favorable condition, a country's household sectors should be the net borrowers and net export practically zero. This economic state of peril becomes inevitable when the above conditions are not melted out with.

It has been seen that increase in prices are accompanied by a decrease in living standards, and business experience a downward spiral. A negative GDP growth is seen over two successive quarters. But this present state of economy is just another cycle, through which it is bound to pan.

Another reason for the recession is the destruction of a real estate or financial asset price bubble. A noteworthy example would be of Japan, which in 1990 passed through, what we call is a “balance sheet recession”. Land and stock prices are remarkably low, which turned the firms valueless and futile.

The psychological implication is that during this period firms unsure about this economy might decide to recruit less people, and save the money, instead of investing.

The government tries to turn the tides by taking up expansionary macroeconomic policies. These include letting more money flow into the, market, a rise in government spending and a dip in taxation.

What is recession is also a vital topic today. The United State had to bear the dawn of recession, which directly and adversely affected India too. Exports have decreased by 22%. According to Federation of Indian Export Organizations (FIEO), about one crore people could have lost their jobs, due to this recession. IT sectors, textile, garments, handicraft, car industries, investment banking etc, underwent tragic loss. But India is slowly but steadily coping with the losses and eradicating recession from the country. A mention worthy point would be the nationalization of twenty commercial banks.