Inflation and it's impacts on the indian economy.pptx

Economy and it's effects on Indian economy.

1. INFLATION AND ITS IMPACT ON INDIAN ECONOMY Dr. Srinibash Dash Associate Professor & Head School of Management GMU, SBP

2. INTRODUCTION Inflation is defined as a sustained increase in the price level or fall in the value of money. When the level of currency of a country exceeds the level of production ,inflation occurs. Value of money depriciates with the occurrence of inflation.

3. MEANING In economics the word Inflation refers to general rise in prices measured against a standard level of purchasing power.

4. TYPES OF INFLATION Open inflation:-The rate where costs rise due to economic trends of spending products and services. Galloping inflation:-Very rapid inflation which is almost impossible to reduce. Creeping inflation:- Circumstance where the inflation of a nation increase gradually,but continuously overtime. Hyper inflation:-It is caused mainly by excessive deficit spending by a government.

5. MEASURES OF INFLATION Monetary policy Fiscal policy Other measures

6. MONETARY MEASURES Credit control Demonetization of currency Issue of new currency

7. FISCAL MEASURE Increase in taxes Increase in savings Surplus budgets Public debt Reduction in unnecessary expenses

8. OTHER MEASURES To increase production Rational wage policy Price control

9. HOW IS IT MEASURED Consumer price index:-It is a measure of price changes in consumer goods and services such as gasline,food,clothing and automobiles.The CPI measures price change from perspective of the purchase. Whole sale price index:-It is the index that is used to measure the change in the average price level of goods traded in whole sale market.

10. ITS IMPACT ON INDIAN ECONOMY Inflation affects both the economy of a country and its social condition as well as the political and moral lives of its inhabitant. However,the economics of inflation are stated and described below:- Price inflation has immense effect on the Time value of Money.This acts as a principal component of the rates of interest,which forms the basis of all TVM calculations.The real or estimated changes occuring in the rates of inflation lead to change in the rates of interest as well.

11. Contnd…. Inflation exerts impact on the treasury of a nation as well. The most immediate effect of inflation is the decrease in the purchasing power of dollar.It influences the investments of a country. Inflation changes the allocation of income.This exerts maximum effect on the lenders than the borrowers at the time of persisting inflation.

12. INDIA INFLATION RATE The inflation rate in India was recorded at 8.15% in april 2014. Inflation rate in India averaged 9.67% from 2012 untill 2014,reaching an all time high of 11.16% in november 2013 and a record low of 7.55% in january 2012. Inflation rate in India is reported by the Ministry of Commerce and Industry,trade. The inflation rate in India was last reported at 8.8% in feb 2012. From 1969 untill 2010,the average inflation rate in india was 7.99% reaching an historical high of 34.68% in sep 1974.