Price Rise in Indian Economy
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Transcript of Price Rise in Indian Economy
Price Rise In Indian Economy
Presented By: Group O2Harini Valluri
Soman Nahata
Ankit Jangalwa
Gandharv Raj Sethi
Vishwajeet Narayan
Inflation: An OverviewThe 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 blow“.
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. Oil Imports
2. Agricultural Production
3. Money Supply in the Economy
4. Government Borrowings and Debt
5. 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
Traders
Business Community and
Industrialists
Foreign Multinationals
Political Parties Price Rise in India
Stake-Holder Chart
Business Community/Industrialist Pvt. Business Banks
Government/Administration UPA Coalition
Common Citizen Low/Middle Class Citizen Rich/Upper-Middle Citizen
Traders Exporters Importers
Political Parties Congress Bharatiya Janta Party CPI(M)
Foreign Multinationals Foreign Manufacturers Foreign Comp. Outsourcing to India
Identifying the Stakes
Pvt. BusinessDecrease in demand for their products
Indian GovernmentFacing criticism for its policies. Is answerable to the public.
Is primarily responsible for controlling the inflation problem BanksIncreasing 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 CitizenCommon Man is agitated as he is bearing the brunt of the price rise and finding hard to makings end meet
Foreign Companies Outsourcing to IndiaForeign companies are finding India increasingly expensive and have started searching for cheaper countries like Vietnam.
Rich/Upper-Middle Class CitizenIs relatively indifferent as he can adjust with relative increase in prices.
ExportersGoods becoming less competitive in foreign markets
Congress Increasingly facing criticism as part of the ruling Govt.
ImportersImporters are increasingly profitable as Indian goods are becoming relatively expensive.
Bharatiya Janta PartyChief opposition party agitating against govt. policies
Foreign ManufacturersFinding India as an increasingly lucrative market as the domestic completion is losing it’s price edge.
Stake V/s Power Grid Power
Stake
Formal or Voting Economic Political
Equity Low/Middle Income
Citizen
High/Upper-Middle
Income Citizen
Indian Government
Economic Pvt. Business
Bank
Importers
Exporters
Influencers Foreign Manufacturers
Foreign Companies
outsourcing to India.
Congress
BJP
CPI-M
Analyze Price Rise And Demand Using A Causal Loop
PRICE DEMAND
+
+
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
Thank You