This document provides information about India's annual inflation rate from 1991-1992 to 2015-2016. It shows that inflation was highest in 1991-1992 at 13.87% due to a combination of factors including the dissolution of the Soviet Union reducing exports, the Gulf War disrupting oil imports, and political instability in India. Inflation was lowest in 2001-2002 at 3.68% due to factors like good monsoon rains improving agricultural production and stabilizing food prices. The document also analyzes inflation in 2016 and provides an IMF forecast for inflation in India up to 2021.

1. 2017
NAME - JOYDEEP BHOWMIK
ROLL NO - 16MSOM019
SCHOOL OF MANAGEMENT,
NIT AGARTALA
4/11/2017
EVOLUTION OF INDIA’S
ANNUAL INFLATION RATE
FROM 1991-92 TO 2015-16

2. INFLATION:-
Increase in Price with respect to time can be said as inflation.
The term "inflation" originally referred to increases in the amount of money in circulation.
However, most economists today use the term "inflation" to refer to a rise in the price level.
An increase in the money supply may be called monetary inflation, to distinguish it from
rising prices, which may also for clarity be called "price inflation".
Economists generally agree that in the long run, inflation is caused by increases in the money
supply.

3. INDIAN INFLATION RATE FROM 1991-92 TO 2015-16
Inflation
Rate (in
%)
1991-92 13.87
1992-93 11.79
1993-94 6.36
1994-95 10.21
1995-96 10.22
1996-97 8.98
1997-98 7.16
1998-99 13.23
1999-00 4.67
2000-01 4.01
2001-02 3.68
2002-03 4.93
2003-04 3.81
2004-05 3.77
2005-06 4.25
2006-07 6.15
2007-08 6.37
2008-09 8.35
2009-10 10.88
2010-11 11.99
2011-12 8.86
2012-13 9.31
2013-14 10.91
2014-15 6.35
2015-16 5.87
0
2
4
6
8
10
12
14
16
1991-92 1996-97 2001-02 2006-07 2011-12 2015-16
INDIAN INFLATION RATE FROM
1991-92 TO 2015-16
INDIAN INFLATION
RATE FROM 1991-92
TO 2015-16

4. REASONS FOR HAVING HIGHEST INFLATION IN 1991-92
Most countries in the world depend on the global economy for a wide variety of things. For India,
we depend on West Asia for our oil, South Africa for our gold, US for our technology, South east
Asia for vegetable oil etc. To buy these items from the world market, we need US dollars - the
global currency of trade. The only way to earn dollars is by selling enough of our stuff in the
global economy (exports).
Since 1960s, India depended on the Soviet Union for our exports - as we failed to develop good
economic relationships with the US and Western Europe. It was a good going for a while (India
and the Soviets) until the proverbial sh*t started to hit the fan. In late 1980s, Soviet Union started
to crack and by 1991 they were split into 15 nations (Russia, Kazakhstan, Ukraine, etc). Now,
India had a major problem because our primary buyer was in turmoil. Exports were down
significantly. Dissolution of the Soviet Union
Meanwhile, there was this guy Saddam Hussein who had his misadventure into Kuwait in 1990.
This led US to war with Iraq in early 1991. Oil fields started to burn and ships found it hard to
reach Persian gulf. Iraq and Kuwait were our big suppliers of oil. The war led to destruction of
our oil imports and the prices shot up substantially - doubling in a few months. Gulf War
and 1990 oil price shock
In the late 1980s India's political system was imploding. Prime Minister Rajiv Gandhi was
involved in a series of troubles - Bofors scandal, IPKF misadventure ,Shah Bano case that
eventually led to his ousting in 1989. What followed were two more terrible leaders who were as
unstable as they were incompetent. This had a huge effect on Indian economy that was totally
forgotten in the political crisis. in 1991 this stop-gap government crashed. Until Narasimha Rao
was sworn as Prime Minister in 1991, Indian economy was left in gross neglect.
Thus, 1991 was the year of perfect storm. This triple crisis brought India on its knees. On the
one end, our primary buyer is gone. On the other hand, our primary sellers were in war. In the
middle, our production was effectively stopped by political crisis. We were running out of
dollars to buy essential items like crude oil and food from the rest of the world. This is
termed a "Balance of Payments Crisis" - meaning India was not able to balance its accounts
- exports were significantly less than imports.
Since, we didn't have many dollars, we went and begged the IMF - the pawn shop of the
world. They asked us to pledge our gold reserves in return for the interim loan of $3.9 billion
(a huge sum for India then) just as the neighborhood moneylenders ask fogir our gold when
we want an emergency loan. We took 67 tons of our gold in two planes - one to London and
other to Switzerland to get this assistance.

5. REASONS FOR HAVING LOWEST INFLATION IN 2001-02
In the beginning of the period during 2002-03, India witnessed uptrend in inflation as the
prices of oil was increased doubly in that period.
Due to drought conditions there was ill effect on agricultural products, which led to the
increase in the prices of edible oil & oil seeds.
Inflation was 3.3% points up during the fiscal 2002-03 and as per the RBI report unlike
preceeding years, this period inflation was dominated by non-food items.
The official expenditure of defence also gave up a sudden rose to four times from Rs.16,347
crores to Rs.65000 crores in the budget of 2002-03.

6. 2016 INFLATION RATE ANALYSIS
..
Fig:- Monthly inflation rate in India for year 2016 (Sources : The Statistics Portal)
By the given data we can see that in May 2016 there was a highest inflation rate of 6.59% and
in Dec 2016 there was a drastic fall with 2.23%, which is very low with comparison to last
year Dec 2015. The Demonetization was one of the biggest step of Indian govt. which
reduces the inflation rate.

7. FORECASTING
Fig:- Inflation Forecasting by IMF up to 2021
At the time of studying I found different data and information through different sources.
What I found in my study is that we forecast the Inflation rate but the Govt. policy is most
important factor at the time to affect market.
The GDP of India at 1990 was 5.53% with the total of $375.89 USD w.r.t Inflation rate of
13.71% The GDP of India for 2021 is forecasted by IMF will be 8.12% with the Inflation
rate of 4.9%