INFLATION<br />Inflation is a situation where the aggregate demand of goods and services exceeds the available supply and due to this there is increase in price level.<br />Or<br />Whenever a product is bought or sold beyond its real price for its worth, then inflation of money occurs.<br />
EXAMPLE:-<br />After the MNCs arrival and raising the professional engineers salary beyond 60K per month, the builders and banks seems to join hand together to inflate the price of rural lands for building lifestyle apartments with swimming pools and landscaping.<br />
Since loans are available easily and engineers blindly take loans to buy<br />their dream home because they can afford and also home is a basic necessity.<br />Here the true price of land and houses is inflated 3 to 5 times and all that extra inflated price goes to the builders as the profit. <br />
Here the inflated price amount does not do any real improvement for the general economy.<br />Government and RBI should evaluate the real price and stop the builders from devouring all the inflated money.<br />
INFLATION EFFECTS ON AN ECONOMY<br /><ul><li> Positive effect on an economy
Negative effect on an economy</li></li></ul><li>POSITIVE EFFECT<br /><ul><li> Includes ensuring central banks can adjust nominal interest rates.
Encouraging investment in non-monitory capital projects.</li></li></ul><li>NEGATIVE EFFECTS<br /><ul><li> Includes a decrease in the real value of money and other monetary items over time.
Uncertainty over future inflation may discourage investments and savings.
High inflation may leads to shortage of goods.</li></li></ul><li>INFLATION IN INDIA 2009<br />In the fiscal year 2004-05 and 2007-08, India experienced an average growth rate of more than 9%. <br />However the global crunch pinched the economy so badly that the economy gave in to the adverse external shocks and some sectors experienced a slump.<br />
Inflation in India 2009 meaning the current rate of inflation in India stands at 11.49%.<br />In 2008 industrial bodies, policy makers all were worried with the steadily-rising inflation. <br />The middle of the year augment the tension as majority of the<br />
population was wary about a double-digit inflation.However things changed within a few months. <br />Inflation in India actually dropped below 1% during the 3rd week of March,2009. In India inflation is measured by the y-o-y variation of the wholesale price index. <br />
While the inflation as measured byWPI is currently at a very low level, the inflation is measured by CPI that is consumer price index is at higher levels of 9 to 10%.<br />
INFLATION IN INDIA STATISTICS<br />YEAR 2009<br />YEAR 2008<br />