1. INFLATION IN INDIA
Name: AKSHAY SONONE
Roll No: 11346

2. What is inflation?
Inflation is defined as a sustained increase in the general level of prices for
goods and services. As inflation rises, every rupee you own buys a smaller
percentage of goods and services.
How is it measured?
By increasing the Inflation rate
% Increase in WPI (Wholesale Price Index)
OR
% Increase in CPI (Consumer Price Index)

3. History of pricing policy:
1st Five year plan: Achieved Price Control satisfactorily
2nd Five year plan: Price level rose by 20%
3rd Five year plan: Price Condition deteriorated drastically
4th Five year plan: WPI reached an all time high of 331 in Sep1974
(1961-62=100)
Janata Rule (1977- 79):
There was an overall deficit of Rs 1365 crores which added to pressure
in prices
Price rise in Eighties:
Wholesale Price Index(WPI)increased by 17% in 1 yr
Price Movement in Nineties:
Average rate of inflation was between 10% to 14%.
Current Scenario:
It is still hovering in the double digit range 11.25%

4. Causes of Price Rice in India
A] DEMAND – PULL FACTORS:
1. Mounting Government Expenditure
2. Deficit Financing and increase in money supply
3. Role of Black Money
4. Growth of Population
B] COST – PUSH FACTORS:
1. Fluctuation in output and supply
2. Taxation, as a factor in rising cost and prices
3. Administered Prices
4. Hike in Oil Prices and Global Inflation

5. Consequences of Inflation
•Maladjustments
•Hindrance to capital accumulation
•Speculation
•Hoarding and Black Marketing
•Distortion of production patterns
•Creation of a sellers market
•Distortions in resource allocation
•Deteriorations in saving
•Distortion of the budget and vicious circle
•Irrationality of consumption

6. Control Of Inflation in India:
A] DEMAND MANAGEMENT
1. Fiscal Measures
2. Monetary Measures
B] SUPPLY MANAGEMENT
1. Fixation of maximum Prices
2. The system of dual Prices
3. Increase in supplies of food grains
4. Public Distribution System(PDS ) and consumer protection
5. Other Relevant Measures

7. What course correction can be taken?
1. To halt fuelling demand pressures:
• Increase subsidies on petrol
• Sixth pay commission
• Loan waiver
2. RBI should concentrate on controlling CPI rather than WPI
3. Emphasis on food grain production
To sum up, monetary measures will be ineffective to check the rise of
prices unless the supply constraints are not taken care of. However, care
must be taken that the growth and employment objectives are not
compromised.

8. “The origin of inflation is often to be found in the
panicky nervousness of unstable governments in
politically unsettled communities. Given Political
stability there is no reason why India should not be able
to carry out her future plans without generating serious
inflationary pressure on the price level”
----Bhabatosh Datta