Recession could be termed as a slowdown in the rate of economic growth. The gross domestic product (GDP) declines remarkably. A severe recession is known as depression. Recession is mainly associated with falling levels of investment, rate of interest, rising unemployment and sharp decline in prices. The 1981 recession is known as severe recession as it ended during November 1982. The recession of 1981 was due to high inflation in the commodity market. The rate of unemployment rose to a great height but due to substantial economic growth, it was not affected that badly. During 1981 1982 recession, the most affected industries and business during the period of recession were housing, steel manufacturing, automobile and luxurious items experienced a downfall which had continued till the stretched period of the next recession. Many other supportive factors responsible in the development of those industries also suffered a great setback as their huge sum of money was just blocked for nothing due to the recession. In order to compress inflation out of the economy, the government had lowered the rate of interest on the loans issued and increased the rate of interest on the deposits so that people get some space to comfort themselves. The employment sector especially in rural area was affected very badly. Many people had to opt for part time jobs since full time jobs were retrenched due to recession. Since there was no new jobs were offered in the market, most people had stopped looking for the jobs. Only highly technically skilled jobs were available but the deserving candidates were already employed either with top local companies or in other countries where they found better opportunities. The recession in 1981 was most severe in the manufacturing sectors including farming, mining and import sensitive production of goods. Many rural areas are highly depending upon these sectors as the major workforce is being acquired from these areas to perform unskilled jobs. They are the class of people who earn on daily basis. During the joblessness condition, they had no work and they had to face the hardest time to survive.

The financial institutions had suffered a heavy setback as they had invested heavily in commercial real estate and other manufacturing units. Most work force from the rural areas were engaged in developing and construction of commercial properties and once the progression stopped in this sector, all the people associated with these development had to suffer from unemployment and economical crisis. The monetary value of all the goods and services produced by an economy is normally measured by three ways – on the basis of expenditure, on the basis of income and on the basis of value added by industry. The value of the goods becomes higher due to higher expenditure and the consumption rate declines sharply due to the holding of money power because of recession. The industries keep on hold the program of further investment in capital goods due to lack of manufacturing and purchase of assets and other beneficial investments rises. People prefer to invest their surplus fund in high rewarding and liquid able investments so that they can get their investment back at any time. The entire cycle of development takes U turn during the state of recession.