Name: Kuldeep Kumar
Country: India

Year: 2014
Volume: Volume-1, Issue-2 (July-December)
Page Number: 22-27

World Economies have seen many ups and downs even of very drastic nature in the past for several times Great Depression of 1930s was the worst ever tragedy for many countries of the world. Classical economists and the economic philosophy propounded by them had always been in full support of Laissez-faire policy. Govt. intervention in economic activities was totally refuted, as all the economic activities are self determined, which meant that there had always been all the possibilities of all economic resources getting optimally allocated for different uses, leaving no scope of underutilization or overutilization. Besides, it was also advocated that economy shall be under equilibrium, having no possibility of getting shifted to either side. Production is undertaken as per needs of economy. All the factors are well paid, no possibility of underproduction or overproduction, whatever is produces is sold out. Factors are fully mobile, and shall get shifted as per needs, no chances of business fluctuations and business cycles etc. was the economic philosophy. But this was proved futile by Great Depression of 1930s and the classical economic philosophy miserably failed to analyze the situation and occurrence of this tragedy, which engulfed economies of world countries. Market imperfections brought out the failure of market mechanism as advocated by classical school of thoughts, which had ruled world economy for couple of centuries. The present crisis brought out by global recession in 2007, creating worst impact on developed and developing countries in every segment , has posed various challenges before their economies, making the countries concerned to undertake various measures to fight out the impact of the worst ever recession.
This paper shall make an effort to highlight the basic causes of this worst recession, its impact on Us economy, its impact on other developing countries in general and Indian economy in particular, besides the efforts taken by govt. of India to contain the ill-effects of recession and efforts taken to avoid the occurrences such crisis in future.
Key words - Recession, great depression. Overproduction, laissez-faire policy, market mechanism, fluctuations, liquidity crunch, bankruptcy, sub-prime lending , Ninja Loans, imbalance