Price Rise In Indian Economy

Presented By: Group O2
Harini Valluri Soman Nahata Ankit Jangalwa Gandharv Raj Sethi Vishwajeet Narayan

Inflation: An Overview
The term was first recorded in 1838.It has been derived from the term L. Inflationem (nom. inflatio ), noun of action from inflare "blow into, puff up," from in- "into" + flare "to blow³. Introduction A sustained increase in the general level of prices so that a given amount of money buys less and less. People on fixed incomes, such as some annuities or income from fixed interest on long-term investments, suffer most when inflation is rising, unless their pensions or incomes are fully indexed to the inflation rate. Inflation is a rise in consumer prices, increasing the cost of living.

Major Reasons for Inflation
1. 2. 3. 4. 5. Oil Imports Agricultural Production Money Supply in the Economy Government Borrowings and Debt Increase in the cost of Production

Measuring Inflation
Different methods of measuring inflation: 1. Consumer Price Indexes (CPIs) 2. Producer Price Indexes (PPIs) 3. Whole-Sale Price Indexes (WPIs) 4. Commodity Price Indexes 5. GDP Deflator 6. Employment Cost Index

Rate Of Inflation In India

Rate Of Inflation In India: Contd

Counter Intuitive Behavior
In today¶s globalized world, where each economy is dependent on others for it¶s survival, Indian economy stands out as an irony. When the whole world is trying hard to mitigate the impact of the global financial crisis, India has marched forward with economic growth rate, second only to China. This peculiar phenomenon can be better understood by a BOT graph which helps in displaying such counter intuitive behaviour effectively.

Behavior Over Time Graph

Stake-Holder Map Of Indian Economy
Common Citizen Govt/Administration

Political Parties

Price Rise in India


Foreign Multinationals

Business Community and Industrialists

Stake-Holder Chart
Business Community/Industrialist y Pvt. Business y Banks Common Citizen y Low/Middle Class Citizen y Rich/Upper-Middle Citizen Political Parties y Congress y Bharatiya Janta Party y CPI(M) Government/Administration y UPA Coalition Traders y Exporters y Importers Foreign Multinationals y Foreign Manufacturers y Foreign Comp. Outsourcing to India

Identifying the Stakes
Pvt. Business
Decrease in demand for their products

Indian Government
Facing criticism for its policies. Is answerable to the public. Is primarily responsible for controlling the inflation problem

Increasing inflation having a serious impact on the cost of funds.

Communist Party of India (Marxist)
Regional Political party against the government having support from the rural poor citizens.

Low/Middle Class Citizen
Common Man is agitated as he is bearing the brunt of the price rise and finding hard to makings end meet

Foreign Companies Outsourcing to India
Foreign companies are finding India increasingly expensive and have started searching for cheaper countries like Vietnam.

Rich/Upper-Middle Class Citizen
Is relatively indifferent as he can adjust with relative increase in prices.

Goods becoming less competitive in foreign markets

Increasingly facing criticism as part of the ruling Govt.

Importers are increasingly profitable as Indian goods are becoming relatively expensive.

Bharatiya Janta Party
Chief opposition party agitating against govt. policies

Foreign Manufacturers
Finding India as an increasingly lucrative market as the domestic completion is losing it¶s price edge.

Stake V/s Power Grid
Power Stake Equity Low/Middle Income Citizen High/Upper-Middle Income Citizen Economic Pvt. Business Bank Importers Exporters Influencers Foreign Manufacturers Foreign Companies outsourcing to India. Congress BJP CPI-M Indian Government Formal or Voting Economic Political

Analyze Price Rise And Demand Using A Causal Loop


Disclaimer: Generally a price-demand loop is a balancing loop. The case mentioned above is a reinforcing loop only to be considered in light of the case mentioned above

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