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Inflation and its trends  in indian economy

Inflation and its trends in indian economy






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    Inflation and its trends  in indian economy Inflation and its trends in indian economy Presentation Transcript

    • Team Members :
      Abhishek Saxena (BLP012)
      Nihar Routray (BLP022)
      Abhishek Kumar (BLP038)
      Shankar Narayan (BLP039)
      Kushal Prakash (BLP061)
    • Inflation…???
    • To study the causes and effects of inflation in the Indian economy and analyze its trends in the past few years.
    • Inflation can be defined as a rise in the general price level and therefore a fall in the value of money.
      Inflation occurs when the amount of buying power is higher than the output of goods and services.
      Inflation also occurs when the amount of money exceeds the amount of goods and services available.
      What is Inflation
      • Creeping inflation
      • Trotting inflation
      • Galloping inflation
      • Hyper inflation
      Types of Inflation
    • Demand-pull inflation
      Cost-push inflation
      Imported Inflation
      Causes of Inflation
    • Rise in Crude oil prices
      Rise in Food prices
      Black Money
      Wage rate wise
      Sub Prime crisis
      Major reasons of Inflation in India
    • 435 commodities are used for the WPI based inflation calculation and base year for the WPI calculation is 1993-94.
      WPI is available at the end of every week (generally Saturdays), for a period of one year ended that day
      The wholesale price index comprises of the following indices:
      Domestic Wholesale Price Index (DWPI)
      Export Price Index (EPI)
      Import Price Index (IPI)
      Overall Wholesale Price Index (OWPI)
      Measuring Inflation
    • Effects of Inflation
      Increased risk
      Fixed income recipients
      Increased consumption ratio
      Lowers national saving
      Illusions of making profits
      Rising prices of imports
      Causes business cycles to go out of business
    • Curbing Inflation
      Strengthen local currency e.g. Indian Rupee
      The Reserve Bank of India (RBI) hikes the interest rates to control inflation.
      Government uses the fiscal policy to check inflation.
      Government to choose alternative of direct intervention
      Reforming long term labor related policies
    • Inflation in the India Growth Story
    • Major Highlights
      In 2009-10, increase in inflation was due to factors like food inflation hike. (Supply shortage of cereals, pulses, wheat, and rice due to drought in country)
      In 2010-11, high inflation is attributed to increased prices of fruits and vegetables (due to increase in demand) and increase in commodity prices e.g. crude oil.
    • Measures taken by Reserve Bank of India:
      Headline inflation in May, 2011 rise to 8.72 %.
      Reserve Bank of India hiked key policy rates (repo rate and reverse repo) by 25 basis points.
      Inflation Control in India – 2011
    • Conclusion
      Inflation continues posing a threat
      Inflation has been caused by rapid growth
      Fall in oil prices and higher interest rates will lead to reduction in inflation
      Challenges for Indian Economy in 2011
      • Getting inflation under control
      • Spreading the growth benefits more equitably.
      • Completing investment projects that are essential for the long term development of economy.
      • Dealing with global financial uncertainty that will make the capital flows and exports more difficult.
    • http://www.worldjute.com/inflation.html
    • Q & A