MOFS (Management of Financial Service) Presentation On Food InflationTo: By: Nitin Agarwal. GR.No.M00031
INFLATION• Inflation is arise in the general level of prices of goods and services in an economy over a period of time• Inflation can have positive and negative effects on an economy• Current inflation rate:7.9%(2012)• Inflation is calculated mainly by wholesale price index and consumer price index
CAUSES OF INFLATION• Rise in Production cost and Labour cost• Speculation• External factor Rising crude oil Price Transportation cost
FOOD INFLATION IN INDIA Rise in the price of Food Items Present Food inflation rate is -1.03 (January14,2012) Calculated on the basis of Wholesale Price Index (WPI) Calculated by Central Statistical Organization (CSO)
WHOLESALE PRICE INDEX• WPI is calculated on a base year• The price from whole sale market is taken for calculation• WPI is available for every week
Conti….• Measure the change in average price level of goods• A sample set of 676 items are taken for calculation• Primary Articles Fuel and Power(14.45) Manufacture Goods(4.8)
CONSUMER PRICE INDEX• Measure estimating the average price of consumer good s and services purchased by house holds• Mainly used by developed countries• Percent change in the CPI is the measure estimating inflation
REASON FOR FOOD INFLATION• Demand and Supply• Population• Exploitation of Land• Climatic changes
Conti……• Change in fuel price• Lack of interest in agriculture• Hoarding of food products• Export of food products
EFFECT OF FOOD INFLATION• A large section of the population are losing out on their purchasing power• Force the common man to borrow money from banks and other financial institutions High food inflation will bring down India’s economic growth
GOVERNMENT RECOMMENDATION• Reduce Tax Rate On food Item• Utility food item on Subsidized rate
Counter Measure• Effective Use of Monetary policy without effecting growth rate• Increase in Productivity Of Agricultural Land• The essential Commodities act• Reduce the Gap between the farm price retail price.
Conti….• Make Public Distribution System effective• Check on middle Man• Private sector Participation
ConclusionIndia is a food deficient country .Under this circumstance thesurvival of common man is be coming tougher and tougher. Inorder to keep pace with population growth, food productionalso needs to grow. It is very important for the Government tocontrol the inflation and ensure that the se circumstances donot arise again in the future. The passing of food security actwill help to great extend. So lets join our hands together for ahappy nation.