This document analyzes economic trends in India from 2006-2012 using data on treasury bill yields, wholesale price index (WPI), nominal interest rates, and inflation rates. It shows that treasury bill yields and WPI generally increased together from 2006-2008 and 2010-2012. It also finds a moderate positive correlation between nominal interest rates and inflation rates over this period. The analysis suggests that changes in treasury bill yields by the central bank are used as a monetary policy tool to control inflation.

1. AMITY BUSINESS
SCHOOL(AUR)
SUB: ECONOMIES ANALYSIS
DATE:18/11/2011
PRESENTED BY:
SUBMITTED TO: GAURAV KUMAR SHIVHARE
MAMTA PANKAJ JAIN MBA GENERAL 1ST SEM
ABS(AUR)

2. YIELD OF SGL TRANS.
YEARS IN T BILL WPI
APRIL 2006-07 5.5176 5
2007-08 7.3701 6.2
2008-09 6.9923 7.9
2009-10 3.1159 1.2
2010-11 3.9533 10.9
2011-12 7.5332 9.7

3. YIELD OF SGL TRANS. IN T BILL WPI
12
10
8
PERCENTAGE
6
10.9
9.7
7.5332
7.3701
7.9
4
6.9923
6.2
5.5176
3.9533
5
2
3.1159
0 1.2
APRIL 2007-08 2008-09 2009-10 2010-11 2011-12
2006-07
YEARS

4. YIELD OF SGL TRANS. IN T BILL WPI
12
10.9
10 9.7
PERCENTAGE
7.9
8
7.3701 7.5332
6.9923
6 6.2
5
5.5176
4 3.9533
3.1159
2 1.2
0
APRIL 2006- 2007-08 2008-09 2009-10 2010-11 2011-12
07
YEARS

5. NOMINAL INTEREST
RATE INFLATION RATE
NOMINAL INTEREST RATE 1
INFLATION RATE 0.407084944 1
COEFFICIENT OF
CORRELATION 0.407084944

6.  The coefficient of correlation of NOMINAL INTEREST
RATE and INFLATION is 0.407.
 Means r=0.407, that show the positive moderate
correlation between them.
 The pattern of both variable is same as one increase
with other and also decrease with other.

7.  This modification is done in treasury bill by central
bank during inflation.
 To control inflation through monetory policy,
central bank sell the securities to public through
commercial bank.
 This process reduce the deposits available to
commercial bank and thus reduce credit creation
capacity of banks and flow of credit to public.