INDIAN ECONOMY ASSIGNMENT

Presentation on
Inflation-concept and inflation in India

Presented by:
Tai Sankio
GF/2020/4675
 CONTENTS
1. Meaning of inflation
2. Causes of inflation
3. Effects of inflation
4. Types of inflation
5. Inflation rate
6. Controlling inflation
 Meaning of inflation
• In economics , inflation is a rise in the general
level of price of goods and services in an
economy over a period of time. When the
general price level rises , each unit of currency
buys fewer goods and services.
 Causes of inflation
• Demand- pull inflation
• Cost - push inflation
• Built - in inflation
 Effects of inflation
• Investment
• Interest rates
• Exchanges rates
• Unemployment
• Stocks
• Decrease in the purchasing power
• Change the allocation of income
 Types of inflation
1. On the basis of the degree of the govt control
• Open inflation

• Suppressed inflation
Suppressed inflation occurs in a controlled economy
where the upward pressure on prices is not allowed to
influence the quoted or managed prices.
2. On the basis of the political conditions

War- time inflation

Inflation that takes place during the period of a war-like
situation is known as War-Time inflation.
peace time inflation
When prices rise during a normal period of peace, it is
known as Peace-Time Inflation.
3. On the basis of scope

• Sectoral inflation

Sectoral Inflation refers to the rise in prices occurring in different

commercial sectors of a country. With the rise in prices of
different raw materials, the prices of the finished products in
diverse sectors increase simultaneously, leading to the initiation
of Sectoral Inflation

• Comprehensive inflation
When the prices of all commodities rise throughout the
economy it is known as Comprehensive Inflation
 Inflation rate
Indian Inflation rate

• The inflation rate of last year in the India was reported up

to 5.59% year-on-year in December 2021,
• Current inflation rate is at 6.07% in February 2022
 Controlling inflation
There are broadly two ways of controlling inflation in an economy
:
1. Monetary measures
2. Fiscal measures

Monetary Measures
• The most Important and commonly used method to control
inflation is monetary policy of the Central Bank . Most central
bank use high interest rates as the traditional way to fight or
prevent inflation.
Monetary measures used to control inflation include:

I. Bank rate policy

II. CRR
III. Open market operations
 Fiscal measures
Fiscal measures to control inflation include
taxation, government expenditure and public
borrowings.
Fiscal measures used to control inflation include:
(i) Increase in taxes
(ii) increase in savings
(iii) surplus budgets
 Conclusion
In reality , low inflation rate and an upward economic
growth is never possible. Nevertheless, low inflation rates
means slow economic growth. Whenever , money is in
excess there is bidding by the consumers due to which the
cost of goods escalate.