Will India Get Affected by The Recession and What Steps Organizations Should Take to Safeguard Themselves?

According to the International Monetary Fund's (IMF) latest World Economic Outlook, global economic activity is slowing "broadly and sharply more than expected," with inflation at record highs. Several economies, including the United States, have been experiencing a slowdown for months.

The burning question that economists are debating is:

What is in Store for India?

India may not be able to completely avoid the effects of the global recession, which economist Nouriel Roubini predicts will begin by the end of this calendar year and last until 2023.

The impact of a global recession, which the International Monetary Fund and the World Bank are increasingly concerned about, is unlikely to be as severe in India as it is in other countries, according to State Bank of India Chairman Dinesh Khara. India is doing reasonably well, Khara told PTI on the sidelines of the International Monetary Fund and World Bank's annual meeting, with a projected growth rate of 6.8 percent and inflation "much under control."

Given the current state of the global economy, India is doing reasonably well, according to Khara, with a projected growth rate of 6.8 percent and inflation "much under control" despite global headwinds. Inflation is not driven primarily by demand. According to him, it is essentially supply-side inflation.

S&P Global Ratings said that while the United States and the Eurozone are in recession, India is unlikely to be affected because its economy is "not so coupled" with the global economy.

Recession Is Unavoidable In 2023, But How Much Will It Cost India?

Significant Decrease in Output By 2023

If the pandemic had not occurred, the global output would have increased by 23% since 2016. However, it is now expected to grow by only 17%. The global slowdown will keep real GDP below its pre-pandemic trend and will cost the world more than $17 trillion, or nearly 20% of global income.

Escalating Public Debt

The International Monetary Fund (IMF) has predicted a recession for next year as well. The IMF's managing director, Kristalina Georgieva, stated earlier this week that global economic growth could be reduced by $4 trillion by 2026.

Preacautive Measures organizations should take to safeguard themselves from the recession:

Secure Credit and Cash Reserves

When a recession strikes, capital resources are likely to be significantly reduced. A slower payment schedule is one of the first effects of the recession on business. If your clients or customers take longer to pay your invoices, you'll have less money coming in. Even if you don't need capital right now, securing credit and building cash reserves while your business is doing well will put you in a much better position during a recession. Secure credit or build cash reserves to cover essential business expenses for a three to the six-month runway.

Get Your Team Ready

Make certain that each team member does the work that is best suited to their strengths. It is critical to carefully explain the situation, reassure your team of their worth, and offer cross-training or other professional development. Employee replacement is costly both financially and in terms of workplace morale. If your company can handle it, offering remote work opportunities is a great way to keep employees happy. This will allow them to spend more time at home with their families while also saving money if they can close the office or shop on occasion to save on utilities.

Be Willing to Change Your Perspective

During a recession, you must be adaptable to a changing market. Unless you only serve the most affluent customers, your offerings will almost certainly need to change or expand. A recession does not have to be a cause for panic if you stay focused, flexible, and financially aware. This is an opportunity to learn more about your company and be more creative with your offerings.

Strengthen Key Customer Relationships

When things are going well, it's much easier to form long-term working relationships and contracts. Such agreements may provide crucial support when times are tough. When a recession hits, clients who have strong relationships with you are less likely to leave. They will remain loyal to your company as long as you can collaborate to provide the services they require. Companies that continue to reach out to customers during a downturn lose less and recover faster when the economy recovers.

Pay Off Your Debts

When a large portion of your income must go toward debt repayment rather than operational costs, it can be especially difficult during a recession. Even if you are unable to pay off all of your debts, begin with those that are currently outstanding, require large lump-sum payments, or are large enough to cause significant problems in a more adverse financial climate.?