topic covers what is inflation? types of inflation causes of inflation ,effects of inflation what is budget? imapct of inflation on our budget explained with example.

1. Inflation impacts your finance and budget directly. Do you agree
with the statement illustrate with an example.
Participant name Registration number
Sana Mushtaque E14CC1051280
Ravi Roshan E14CC1053138
Singh Anu Nagina E14CC1052989
Mouni Sharma E14CC1052992
AM – 2 PRESENTATION
Faculty Name – Ashutosh Chandra
BATCH 25
CENTER PATNA

2. Sr. No. Description
1 What is inflation?
2 Stages Of Inflation .
3 Causes Of Inflation.
4 Effects Of Inflation .
5 What Is Budget ?
6 Purpose Of Budget.
7 The Direct Impact Of Inflation On Finance And Budget .
8 Example For Discussing Impact Of Inflation .
9 Conclusion
10 Why it is important and controlling measures.
AGENDA
INFLATION

3. WHAT IS INFLATION ?
Inflation is defined as a sustained increase in the general level of
prices for goods and services.
As inflation rises, every rupee you own buys a smaller percentage
of a good service.
when inflation goes up, there is a decline in the purchasing power
of money.
When aggregate demand exceed aggregate supply is
called as Inflation.

4. VARIOUS STAGES IN INFLATION
1. Creeping Inflation :- Circumstances where the inflation of the
nation increases gradually, but continuously over time, 2-4 %
annually .
2. Trotting Inflation :- occurs when the percentage has risen from
5-10 % . It is harmful to the economy because it damage the
economy growth to fast.
3. Galloping Inflation :- when inflation rises to 10% or more.
Money looses value so fast that business and employee income
can’t keep up with cost and price.
3. Hyper Inflation :- it occurs when prices rise at any moment and
there is no level to which the prices might rise.

5. VARIOUS CAUSES IN INFLATION
1. Excess Demand
2. Increase Wages and Salary
3. Increase in cost of production

6. VARIOUS EFFECTS OF INFLATION
Anticipated inflation is the percentage increase in the level of prices
over a given period that is expected by participants in an economy.
Purchasing power can be described as being able to purchase the
same amount of items in the future as you can today.
Unanticipated inflation occurs when people do not know inflation is
going to occur until after the general price level increases.
1. Creditors lose and debtors gain if the lender does not anticipate inflation
correctly.
2. People living off a fixed-income, like retirees, which effects their purchasing
power and their standard of living.
3. Non-uniform inflation can lead to heavy competition in the global market
and threaten the small economies.
4. The entire economy must absorb repricing costs ( Updating the cost ).
5. What will happen next makes corporation and consumers less likely to
spend.

7. BUDGET
A budget is a financial document used to project future income and
Expenses of the government.
To put it simply, a budget plans future savings and spending as well
as outlining projected income and expenses.
PURPOSE OF BUDGET :-
1. ENCOURAGEMENT TO ECONOMIC DEVELOPMENT.
2. BALANCED REGIONAL DEVELOPMENT.
3. RE-DISTRIBUTION OF INCOME AND PROPERTY.
4. ECONOMIC STABILITY.
5. CREATION OF EMPLOYMENT.

8. IMPACT OF INFLATION ON ECONOMY AND CAPITAL
Higher rate of interest charged by banks on borrowings.
Early payment of borrowings.
Decrease in investment.
Loss of credibility.
Higher rate of interest demanded by depositors.
Inflation translates into higher costs and lower returns.
Foreign investors disenchanted.
Discourage foreign capital.
Volatility in stocks market.

9. IMPACT OF INFLATION ON INVESTOR
INVESTOR
LOSS IN THE VALUE OF INTEREST ON SAVINGS
LESS KEEN TO SAVINGS IN FUTURE
LESS INVESTMENT
REAL TIME LOSS TO WHOLE ECONOMY

10. YES I AGREE THAT INFLATION DIRECTLY IMPACT
ON OUR BUDGET. EXAMPLE IS :-
Standard
Of Living • Rs.30,000
House Rent • Rs.10,000
Investment
In
Insurance
• Rs.1,200
Investment
In FD • Rs.2,00,000
Investment
In MF • Rs.1,00,000
Saving A/C
Is • Rs.1,00,000
SALARY =RS 60,000
Total Expenses = Rs.41,200
Total Savings = Rs.18,800
Budget For A MonthMr. Ahuja

11. A ILLUSTRATION ON DIRECT IMPACT OF INFLATION
ON OUR BUDGET .
Standard
Of Living • Rs.30,000
House Rent • Rs.10,000
Investment
In
Insurance
• Rs.2,00,000
Investment
In FD • Rs.3,00,000
Investment
In MF • Rs.1,00,000
Saving A/C
Is • Rs.1,00,000
SALARY =RS 60,000
Standard of living –Rs.31,500
House-rent –Rs.10,500
INFLATION – 5%
Insurance –Rs.1,90,000
Interest on FD –Rs.2,85,000
Return on MF – Rs.95,000
Saving A/c - Rs.95,000
Total expenses – 42,000
Total savings – 18,000
Budget Of Month Now

12. CONTINUE……
CAR Of Rs - 5,00,000
UPCOMING NEEDS OF AHUJA IS :-
Before Inflation
Interest-6.6% Interest -8.5%
Down Payment -50,000 Down Payment - 75,000
CAR Of Rs - 5,05,000
After Inflation

13. HOW ONE CAN FACE OR BEAT INFLATION
One should take inflation into account when planning for future
expenses and retirement.
Maintaining the financial lifestyle even after retirement depend on
how much you saved and how fast you spend your funds.
We should plan our financial goals by keeping in mind that low rates
of inflation will not continue it can be rise or fall.
CONCLUSION
One should pay attention to the long-term rate of inflation and plan
your asset allocation according to it for better and beatable returns.

14. MEASURES TO CONTROL INFLATION
1. MONETARY MEASURES :- The most important and commonly
used method to control inflation is monetary policy of RBI. Most
central bank use high rate of interest as the traditional way to
fight or prevent inflation .
2. BANK RATE POLICY :- In case of inflation, the bank rate is
increased, the supply of money is controlled. It is main
instrument of monetary control during period of inflation .
3. OPEN MARKET OPERATION :- During inflation, the central bank
sells government securities and price bonds in the open market
to contract the supply of money.
4. CASH RESERVE RATIO :- To control inflation the central bank
raises the CRR which reduces the lending capacity of bank.

15. MEASURES TO CONTROL INFLATION
contd.
5. FISCAL MEASURE :- Fiscal measure to control inflation including
taxation, government expenditure and public borrowing . The
government can also take some protectionist measure such as
banning the export of essential items such as pulses , cereals
and oil to support consumption, encourage import items by
lowering duties on import items etc.
7. PUBLIC REVENUE :- Government increase the public revenue.
6. PUBLIC BORROWING :- During inflation increase the public
borrowing .
8. PUBLIC EXPENDITURE :- Government decrease the expenditure.

16. THANK YOU