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
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
Govt/Administration
Citizen

Political Parties Price Rise in India Traders

Business
Foreign
Community and
Multinationals
Industrialists
 Stake-Holder Chart

Business Community/Industrialist Government/Administration

 Pvt. Business  UPA Coalition
 Banks
Common Citizen Traders
 Low/Middle Class Citizen  Exporters
 Rich/Upper-Middle Citizen  Importers
Political Parties Foreign Multinationals
 Congress  Foreign Manufacturers
 Bharatiya Janta Party  Foreign Comp. Outsourcing to India
 CPI(M)
 Identifying the Stakes

Pvt. Business Indian Government

Decrease in demand for their products
Banks
Increasing inflation having a serious impact on the cost of
funds.
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
Rich/Upper-Middle Class Citizen
Is relatively indifferent as he can adjust with relative
increase in prices.
Congress
Increasingly facing criticism as part of the ruling Govt.
Bharatiya Janta Party
Chief opposition party agitating against govt. policies
Facing criticism for its policies.
Is answerable to the public.
Is primarily responsible for controlling the inflation problem
Communist Party of India (Marxist)
Regional Political party against the government having
support from the rural poor citizens.
Foreign Companies Outsourcing to India
Foreign companies are finding India increasingly
expensive and have started searching for cheaper
countries like Vietnam.
Exporters
Goods becoming less competitive in foreign markets
Importers
Importers are increasingly profitable as Indian goods are
becoming relatively expensive.
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 Formal or Voting Economic Political

Stake

Equity Low/Middle Income

Indian Government
Citizen

High/Upper-Middle

Income Citizen

Economic Pvt. Business

Bank

Importers

Exporters

Influencers Foreign Manufacturers Congress

Foreign Companies BJP

outsourcing to India. 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