1 Objectives of the Report
This report aims to analyse the relationship between the repo rate, Gross Domestic Product (GDP),
and unemployment in India. By examining historical data and conducting statistical analyses, the
report seeks to understand how changes in the repo rate impact economic growth and employment
levels.
2. Introduction
The repo rate is the rate at which the central bank of a country, such as the Reserve Bank of India
(RBI), lends money to commercial banks. It is a crucial tool in monetary policy, influencing borrowing
costs, liquidity, and overall economic activity. By adjusting the repo rate, the RBI aims to control
inflation, stabilize the currency, and influence economic growth.
2.1 Repo Rate and its Macroeconomic Impact
2.2 Theoretical Framework
The repo rate, as a part of monetary policy, affects the cost of borrowing and, consequently,
investment and consumer spending. A lower repo rate typically encourages borrowing, leading to
increased investment and consumption, which can boost GDP. Conversely, a higher repo rate may
slow down economic activity to curb inflation. The relationship with unemployment is more
complex; while higher GDP growth often reduces unemployment, restrictive monetary policies that
slow GDP growth can lead to higher unemployment.
2.3 Historical Context
Provide a brief overview of the trends in the repo rate, GDP growth, and unemployment in India over
the past two decades. Highlight key periods of policy change and their impacts on the economy.
Chart/Graph 1: A line graph showing the trend of the repo rate, GDP growth rate, and
unemployment rate in India over the last 20 years (2000-2020).
3. Inflation Rate: History, Trend, …., Important <>0%
GDP: Measure of an economy, …
Exchange rate: Dollar (Universal), Gold Standard, History, …
Unemployment Rate: Types, demographic divide – Rural/Urban, Male & Female, Trends,…
4. Analysis of GDP and Unemployment in Relation to Repo Rate
4.1 Descriptive Analysis – Repo rate vs. Inflation Rate
Use historical data from the RBI and other reliable sources to describe the trends in GDP and
unemployment in relation to changes in the repo rate.
GDP Trends: Discuss how GDP has responded to changes in the repo rate. Highlight any
periods where repo rate adjustments had a significant impact on GDP growth.
Unemployment Trends: Explore the relationship between the repo rate and unemployment.
Discuss whether changes in the repo rate were followed by changes in employment levels.
Chart/Graph 2: A bar chart or line graph comparing GDP growth and unemployment rates with
corresponding repo rate changes.
4.2 Correlation Analysis
Perform a correlation analysis to quantify the relationship between the repo rate and GDP growth,
and between the repo rate and unemployment.
GDP and Repo Rate Correlation: Present the correlation coefficient and discuss the strength
and direction of the relationship.
Unemployment and Repo Rate Correlation: Similarly, present the correlation between the
repo rate and unemployment.
Table 1: A table summarizing the correlation coefficients between the repo rate, GDP growth, and
unemployment.
5. Conclusion
5.1 Summary of Findings
Summarize the key findings from the descriptive, correlation, and regression analyses. Highlight the
most significant relationships and the implications for economic policy.
5.2 Policy Implications
Discuss the implications of these findings for monetary policy in India. Consider what the results
suggest about the RBI's ability to manage economic growth and unemployment through adjustments
to the repo rate.
5.3 Limitations and Future Research
Acknowledge any limitations in the analysis, such as data constraints or the exclusion of other
influencing factors. Suggest areas for future research that could provide additional insights into the
relationship between the repo rate, GDP, and unemployment.
