Presentation on Inflation

1. Prepared By
G.Abirami - 117071004
A.Sharmilees - 117071103
inflation

2. Meaning
In economics, inflation is a rise in the general level of prices of
goods and services in an economy over a period of time. When the
general price level rises, each unit of currency buys fewer goods and
services.

3. Definition
According to Webster's “An increase in
the amount of currency in circulation,
resulting in a relatively sharp and
sudden fall in its value and rise in
prices: it may be caused by an increase
in the volume of paper money issued or
of gold mined, or a relative increase in
expenditures as when the supply of
goods fails to meet the demand.

4. Inflation on ground
Inflation has always been a pressing socio-political concern in
India
The wages of those in unorganized sector is not compensated by
 periodical wage and salary hikes based on the consumer price
index
“higher prices were inevitable”
- President of India
Government claimed that this was the result of three forces, two
of these are completely out of the government's control
 Cost-push effect
 Demand-pull effect
 Supply shocks

5. Examples
• Increase in the price of wheat
• Increase in the price of world oil
• Increase in the price of rice
• Increase in the price of CNG

6. Types of inflation
On the basis of the degree of the government control
• Open inflation
• Suppressed inflation
On the basis of political conditions
• War-time inflation Peace time inflation
On the basis of scope
• Sectoral inflation
• Comprehensive inflation

7. CONSEQUENCES
• Adverse effect on production
• Adverse effect on distribution of income
• Obstacle to development
• Changes in relative prices
• Adverse effect on the B.O.P

8. MEASURES
Monetary policy
•Credit Control
•Demonetization of Currency
•Issue of New Currency
Fiscal policy
•Reduction in Unnecessary Expenditure
•Increase in Taxes & Savings
•Surplus Budgets & Public Debt

9. Contd…
Other Measures
• To Increase Production
• Rational Wage Policy
• Price Control

10. Causes
FACTORS ON DEMAND SIDE
•Increase in money supply
•Increase in disposable income
•Deficit financing
•Foreign exchange reserves
FACTORS ON SUPPLY SIDE
•Rise in administered prices
•Erratic agriculture growth
•Agricultural price policy
•Inadequate industrial growth

11. Effects
• Investment
• Interest rates
• Exchange rates
• Unemployment
• Stocks
• Decrease in the purchasing power
• Change the allocation of income

12. Remedies
Inflation can not be removed suddenly from India, but can be
controlled step by step such as:
•Govt. should reduced various taxes from daily consumable products.
•Stop storage and black marketing of food items.
•Not take actions only at time of elections, but work as a team through
out work period.
•If one of these steps are taken by Govt. then we can eliminate
“inflation” from our economy system.

13. Contd…
• Overhaul institutions like the Indian Council of Agriculture
Research (ICAR), Agriculture Universities and the food distribution
systems
• Stringent punishment for Black hoarders
• Address Global Warming and Climate Change
• Conserve every drop of water
• Control population, in turn to control the future demand

14. Contd…
• Proper enactment of the Rural Employment Guarantee Act
• Special Agricultural Zones (SAZ) in line with Special Economic
Zones (SEZ)
• Small and marginal farmers should have equal access to credit,
fertilizer, improved seeds, pesticides, electricity, and water