Published on

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide


  1. 1. 1 1
  2. 2. E-governance 2 2
  3. 3. About the presentationFocus :-• Study focus on RBI credit policy during decades 2009-11.• It also focus on variables in Inflation Rate.• It also focus on effects on Policy in Inflation as well as on economy. Introduction to Inflation Introduction to RBI Objectives of the study Hypothesis Methodology of the study Inflation,Monetary and credit policies Data analysis and interpretation Scope of the study Conclusions Suggestions 3
  4. 4. Objectives of the study The study is focuses on the term of inflation, what is inflation, its meaning,causes, direct or indirect effects on economy, how it will control? To understand the credit policy and the monetary terms for controlling theinflation as well as money flow into the market. To examine the effects on the banking sector or the RBI credit policy forcontrol of money flow into the market. To study the fundamental factors affecting the monetary value. 4
  5. 5. To examine the factors of inflation,including effect on GDP,inflation rate etc.To learn about the monetary concept in inflation and theirinstruments as control measures.To make sure the positive as well as negative effects of inflation onRBI credit policy.To review the economy performance in the current financial yearand estimate the economy prospects for the coming year. 5
  6. 6. Hypothesis HypothesisInflation is always good for the economy but over inflation affects the economy.The credit policies are designed with the aim of controlling themoney supply and balance the position of the economy.Inflation is related to economical development of the nation. To control the inflation RBI always try to get it controlled throughthe credit policies but it could be controlled by other factors also. 6
  7. 7. Methodology of the studyThis study is totally based on secondary data.The sources of data are various economic surveys of Indiaand RBI bulletin, online database of Indian Economy,Journals, articles, news papers and various books based onIndian Banking sectors. 7
  8. 8. Introduction to InflationInflation is a rise in the general level of prices of goods andservices in an economy over a period of time.Inflations effects on an economy are various and can besimultaneously positive and negative.Most economists today use the term "inflation" to refer to a rise inthe price level.Inflation is largely dependent on supply and demand pressures inthe economy.Most economists today use the term "inflation" to refer to a rise inthe price level 8
  9. 9. Causes of inflationInflation comes in different forms and those at are familiar withthe economic matters would observe that there are trends in theway that prices are moving gradual and irregular in relation to aggregate sections of the economy.The main causes of inflation are: Demand-pull Inflation Cost push Inflation Monetary inflation Structural inflation 9
  10. 10. Effects of inflationInflation can have positive and negative effects on an economyPositive effects: Mitigation of economic recessions Debt relief by reducing the real level of debt.Negative effects: Distortion of relative prices Increased risk - Higher uncertainties Existing creditors will be hurt Lowers national saving 10
  11. 11. Introduction to RBIThe Reserve Bank of India was established on1 April 1935 in acordance with provisions of ReserveBank of India Act, 1934. Bank of India Act, 1934.The central office of Reserve Bank was initiallyestablished in Kolkata but was permanently movedto Mumbai in 1937. The central office is where the Governer sits andwhere policies are formulated. 11
  12. 12. Monetary & Credit policyMonetary policy is, by common agreement, the defining function of acentral bank.The Monetary and Credit Policy is the policy statement, traditionally announced twice a year, through which the Reserve Bank of India seeksto ensure price stability for the economy.Monetary policy, which is usually understood to represent policies,objectives, and instruments directed towards regulating money supplyand the cost and availability of credit in the economy. 12
  13. 13. Data Analysis and interpretation Money Supply (M3) 25 20 15 10 Money Supply (M3) 5 0 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 est est estAs per the above graph it is showing the updates of money supply (M3) in themarket. As mention in the year 2005/06 the money supply is calculated at21.2% which is increases in next year at 21.5% and the % of money supply isdecreases in the year of 2007/08 at 21.2 after that it is calculated 13.3 % in2009/10. And it is expected to be high money supply % in 2010/11 at 19.1 %. 14
  14. 14. GDP Growth Rate Real GDP (at factor cost, % change) 10 9 8 7 6 5 Real GDP (at factor cost, % 4 change) 3 2 1 0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 est est estAs per the Indian economy update year 2010 the above graph is showing about the GDP %change from 2007 to 10. In between 2007/08 to 2009.10 it is estimated to 8% & in 2007/08the GDP is indicated at 9.2 % suddenly in 2008/09 it decreases at 6.7%. And the GDP isestimated to be 8.5 to 8% in the year of 2011 to 2013. 13
  15. 15. Sectoral Deployment of personal loan housing Personal loan housing 14 12 10 8 6 Personal loan housing 4 2 0 -2 8-Feb 9-Feb 8-Feb 9-Feb 8-Feb 9-Feb -4 Public sector bank Private sector bank Foreign bank -6As above graph is showing the significant variations in flow of credit to personal loanhousing sectors by the three broad bank groups during 2008-09. credit growth to personalloans and services decelerated. 15
  16. 16. Sectoral Deployment of Small enterprises 250 200 150 100 Small enterprises 50 0 Public sector Private Foreign bank sector bank bankAs per the above graph in 2008 the credit ratio is decelerated from 49 to 36 %, by privatesec bank it is decelerated at 23.2% , by foreign sec bank it is decelerated at 59%. All overwe can say that the credit by all sector bank is decelerated to small enterprise. 16
  17. 17. Scope of the studyIt can help in to find out the causes behind inflation which shows the increasing or decreasing variables in inflation rate.It can also help in to find the control measures for inflation,to control its variable effects on economy.It also examines the positive as well as negative effects of inflation.To review the direct or indirect effects of inflation on economy as well as inmonetary and credit policy of RBI. 17
  18. 18. ConclusionsInflation if well controlled at certain level then it could be better for the economyWhen demand increases and supply decreases then inflation increases.So industry should have a balance production so that demand and supply is equaland inflation decreasesInflation remained the major concern during 20011-12 due to upsurge in globalcommodity price and crude oil through wholesale price index. 18
  19. 19. SuggestionsRBI should take proper steps to control Inflation if it seems to come at certainlevel in economyMonetary Policies should be framed by RBI by analyzing economic condition inthe country’s economy.Government should maintained balanced in sectoral development by providingproper circulation of fund. 19
  20. 20. CourtesyWeb sites: TimesThe Times Of India 20
  21. 21. 21