inflation about india
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INFLATION IN
INDIA
INFLATION IN
INDIA
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INFLATION “Inflation is nothing more than a sharp upward rise in price
level.”
Too much money chasing, too few goods.”
Inflation is a state in which the value of money is falling i.e.
price are rising.”
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VARIATIONS ON INFLATION
Deflation is when the general level of prices is falling.
This is the opposite of inflation.
Hyper inflation is unusually rapid inflation. In extreme
cases, this can lead to the breakdown of a nation's
monetary system.
Stagflation is the combination of high unemployment
and economic stagnation with inflation..
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KINDS OF INFLATION On the basis of rate of inflation On the basis of degree of control On the basis of causes Others
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CAUSES OF INFLATION
Demand-Pull Inflation
This theory can be summarized as "too much money
chasing too few goods". This usually occurs in growing
economies.
Cost-Push Inflation
When companies' costs go up, they need to increase
prices to maintain their profit margins.
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Ep1
D1
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Eq Eq1
Demand-pull Inflation
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Ep1
E
E1
S
S1
D
Cost-push Inflation
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HOW TO CONTROL INFLATION
Monetary Measures
Other Measures
Fiscal Measures
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Monetary Measures Credit Control
Demonetization of Currency
Issue of New Currency
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Fiscal Measures
Reduction in Unnecessary Expenditure
Increase in Taxes
Increase in Savings
Surplus Budgets
Public Debt
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OTHER MEASURES
To Increase Production
Rational Wage Policy
Price Control
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How is it Measured?
Consumer Price Index
Wholesale Price Index
Consumer Price Index CPI is a measure estimating the average price of consumer
goods and services purchased by households.
CPI measures a price change for a constant market basket
of goods and services from one period to the next within the
same area (city, region, or nation).
It is a price index determined by measuring the price of a
standard group of goods meant to represent the typical
market basket of a typical urban consumer. The percent
change in the CPI is a measure estimating inflation.
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Wholesale Price Index WPI was published in 1902,and was one of the economic
indicators available to policy makers until it was replaced by
most developed countries by the CPI market. index in the
1970.
WPI is the index that is used to measure the change in the
average price level of goods traded in wholesale market.
Some countries (like India and The Philippines) use WPI
changes as a central measure of inflation. However, India and
the United States now report a producer price index instead.
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Problems with WPI In present day service sector plays a key role in Indian
economy. Consumers are spending loads of money on
services like education and health. And these services are
not incorpated in calculation of WPI.
WPI measures general level of price changes either at
level of wholesaler or at the producer and does not take
into account the retail margins. Therefore we see here that
WPI does give the true picture of inflation.
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Problems with WPI
WPI is supposed to measure impact of prices on business.
“But we use it to measure the impact on consumers. Many
commodities not consumed by consumers get calculated in
the index.
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Inflation rate
PI for a certain year - PI for a comparative year X 100
PI for a comparative year
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CURRENT INFLATION RATES
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Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ave
2011 1.63% 2.11% 2.68% 3.16% 3.57% 3.56% 3.63% 3.77% 3.87% 3.53% NA NA NA
2010 2.63% 2.14% 2.31% 2.24% 2.02% 1.05% 1.24% 1.15% 1.14% 1.17% 1.14% 1.50% 1.64%
2009 0.03% 0.24% -0.38% -0.74% -1.28% -1.43% -2.10% -1.48% -1.29% -0.18% 1.84% 2.72% -0.34%
2008 4.28% 4.03% 3.98% 3.94% 4.18% 5.02% 5.60% 5.37% 4.94% 3.66% 1.07% 0.09% 3.85%
2007 2.08% 2.42% 2.78% 2.57% 2.69% 2.69% 2.36% 1.97% 2.76% 3.54% 4.31% 4.08% 2.85%
2006 3.99% 3.60% 3.36% 3.55% 4.17% 4.32% 4.15% 3.82% 2.06% 1.31% 1.97% 2.54% 3.24%
2005 2.97% 3.01% 3.15% 3.51% 2.80% 2.53% 3.17% 3.64% 4.69% 4.35% 3.46% 3.42% 3.39%
2004 1.93% 1.69% 1.74% 2.29% 3.05% 3.27% 2.99% 2.65% 2.54% 3.19% 3.52% 3.26% 2.68%
2003 2.60% 2.98% 3.02% 2.22% 2.06% 2.11% 2.11% 2.16% 2.32% 2.04% 1.77% 1.88% 2.27%
2002 1.14% 1.14% 1.48% 1.64% 1.18% 1.07% 1.46% 1.80% 1.51% 2.03% 2.20% 2.38% 1.59%
2001 3.73% 3.53% 2.92% 3.27% 3.62% 3.25% 2.72% 2.72% 2.65% 2.13% 1.90% 1.55% 2.83%
2000 2.74% 3.22% 3.76% 3.07% 3.19% 3.73% 3.66% 3.41% 3.45% 3.45% 3.45% 3.39% 3.38%
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EFFECTS OF INFLATION
They add inefficiencies in the market, and make it
difficult for companies to budget or plan long-term.
Uncertainty about the future purchasing power of
money discourages investment and saving.
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EFFECTS OF INFLATION
There can also be negative impacts to trade from an increased
instability in currency exchange prices caused by unpredictable
inflation.
Higher income tax rates.
Inflation rate in the economy is higher than rates in other
countries; this will increase imports and reduce exports, leading
to a deficit in the balance of trade.
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EXAMPLE
Increase in the price of transport
Increase in the price of world oil
Increase in the price of rice
Increase in the price of housing
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PUBLIC SURVEY Rise of Price money for the basic commodities
By controlling the basic habitats and natural disasters.
Inflation about the same product price rises without any
information. E.g.. The price of a shirt today is rs.100 the
same shirt price cost tomorrow for 150. This is inflation.
To control this inflation Take out the black money Control the demand and supply Not giving the products for free Controlling the import tax. Developing the agriculture
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Increase the production via Inc the salary %.
Increase the rate of interest.
About inflation from IT a guy
Inflation caused because of out sourcing
Stopping the outsource for studies in abroad
Giving infrastructure in India
PUBLIC SURVEY
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The conclusion from all this is:
You don’t have to live cheap, just
live smart..! By
Santhosh and Narendra kumar
04/11/2023 07:59 PM 27
Thank you..
NARENDRA KUMAR SANTHOSH
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