Inflation in India

PRESENTED BY
S A S WAT M O H A N T Y
 Contents:-
1. What is inflation?
2. Causes of Inflation.
3. Types of Inflation.
4. Feature of Inflation.
5. Inflation in India.
6. Major reason of inflation in India.
7. How is Inflation measured?
8. How to control inflation.
9. What is RBI doing for it?
 What is inflation ?
Inflation refers to the rise in the prices of most goods and services of daily or
common use, such as food, clothing, housing, recreation, transport, consumer
staples, etc.
 Inflation measures the average price change in a basket of commodities and
services over time.
 Causes of Inflation
Factors causing ‘increase in demand’ for goods & services :
i. Increase in money supply
ii. Decrease in tax rates
iii. High growth rate of population
Factors causing ‘decrease in supply’ of goods & services :
i. Scarcity of inputs
ii. Strikes & lockouts in firms
iii. Increase in exports
 Types of Inflation:-
ON THE BASIS OF CAUSE OF INFLATION:-
I. Demand-pull Inflation.
II. Cost-push Inflation.

COST-PUSH INFLATION
DEMAND PULL INFLATION
 FEATURES OF INFLATION:-
The important characteristics of inflation may be summarized as under:
1. Inflation is always associated with a rise in prices which is continuous and
persistent. It should be distinguished from price rise which may occur
temporarily or during a cyclical upswing.
2. Inflation is a dynamic process which can be observed over the long period.
3. Inflation is basically an economic phenomenon. It originates within the
economic system and is fostered by interaction of economic forces.
4. Excess of demand over the available supply is the hall mark of inflation. It is
a condition of economic disequilibrium.
5. Inflation may be caused by ‘demand-pull’ factors or ‘cost push’ factors or
both working together.
 Inflation in India:-
Based on the wholesale price index, rose to 9.89
percent in February from 8.56 percent in the previous
month, official data revealed Monday.
The annual inflation rate was 3.5 percent in February
2009.
 Major reason of inflation in India
1. Rise in Crude oil prices
2. Rise in Food prices
3. Black Money
4. GDP
5. Wage rate wise
6. Sub Prime crisis
 How is Inflation measured?
In India, inflation is primarily measured by two
main indices
WPI (Wholesale Price Index)
CPI (Consumer Price Index)
 HOW TO CONTROL INFLATION:-
MANDATORY MEASURES:-
1.Credit control
2.Demonetization of currency
3.Issues of new currency
FISCAL MEASURES:-
1.Increase in taxes
2.Public debt
3.Increase in saving
 WHAT IS RBI DOING FOR IT:-
 RBI is going to increase in interest rate of all types loan.

 RBI is also cut down the dept rate

 RBI is also doing work for to control the credit.
 RBI hikes repo, reverse repo rates by by 25 bps: the reserve bank of india RBI today
raised key policy rates by 25 basis points bps to marks a reversal policy regime to
tame inflation and anchor inflationary expectations.
 Conclusion
India is a food deficient country. Under this circumstance the survival
of common man is becoming tougher and tougher. In order to keep
pace with population growth, food production also need to grow. It
is very important for the government to control the inflation and
ensure that these circumstances do not arise again in the future. The
passing of food security act will help to a great extend. So lets join
our hands together for a happy nation