how to control inflation in india

2. introduction
• .INFLATION“ Inflation is nothing more than a sharp upward
rise in price level.” Too much money chasing, too few goods.”
Inflation is a state in which the value of money is falling i.e.
price are rising.
• 3. KINDS OF INFLATION On the basis of rate of inflation On the
basis of degree of control On the basis of causes Others.
• CAUSES OF INFLATION Demand pull inflation Cost push
inflation.
• HOW TO CONTROL INFLATION Monetary Measures Fiscal
Measures Other Measures.

3. MARKETING PLAN
• About IdeaLeading mobile operator in IndiaAdityaBirla
group is the sole promoter3rd Largest GSM company in
IndiaCovernearly 70 % of India’stelephonypotential
• SEGMENTATIONTARGET MARKETPOSITIONING
• SegmentationGeographicRegions and cities -Idea GSM
services are licensed in 13 circles of India and used in metro
cities & small villages DemographicAge, Family size, Income,
Occupation, Education
• Target MarketAny one from 16 to 60 years old from
rural,urban & semi-urban area.60% target market is from
rural area.

4. Inflation and unemployment

5. Inflation and unemployment
 Inflation & Phillips curve: The inflation rate is the percentage change
in the price level. The Phillips Curve shows the relationship between
the inflation rate and the unemployment rate.
 Causes of Inflation: Demand-pull inflation is inflation initiated by
an increase in aggregate demand. Cost-push, or supply-side,
inflation is inflation caused by an increase in costs
 Stagflation: Stagflation occurs when output is falling at the
same time that prices are rising. One possible cause of
stagflation is an increase in costs.
 7% becomes the natural rate in this case. Whenever unemployment
rate is pushed below natural rate , wages increase, pushing up costs.
This leads to a lower level of output which pushes unemployment
back to the natural rate
 CYCLICAL UNEMPLOYMENT this type of unemployment may be
widespread across a range of industries and sectors Keynes

6. HOW TO CONTROL INFLATION



Monetary Measures
Fiscal Measures
Other Measures
MonetaryMeasures
• Credit Control
• Demonetization of Currency

7. FISCAL MEASURES
•
•
•
•
•
•
•
•
•
•
Reduction in Unnecessary Expenditure
Increase in Taxes
Increase in Savings
Surplus Budgets
Public Debt
To Increase Production
Rational Wage Policy
Price Control
Consumer Price Index
WholesalePriceIndex
OTHER MEASURES
• To Increase Production
• Rational Wage Policy
• Price Control

8. HOW IS IT MEASURED?
Consumer Price Index
Wholesale Price Index
 Consumer Price Index
• CPI is a measure estimating the average price of
consumer goods and services purchased by households.
• CPI measures a price change for a constant market
basket of goods and services from one period to the next
with in the same area(city, region, ornation)
• It is a price index determined by measuring the price of a
standard group of goods meant to represent the typical
market basket of a typical urban consumer. The percent
change in the CPI is a measure estimating inflation.

9.  WHOLESALE PRICE INDEX
• WPI was published in1902, and was one of the economic
indicators available to policy makers until it was replaced
by most developed countries by the CPI market Index in
the1970.
• WPI is the index that is used to measure the change in the
average price level of goods traded in wholesale market.
• Some countries (like India and ThePhilippines) use WPI
changes as a central measure of inflation. However, India
and the United States now report a producer price index
instead.

10. EFFECTS OF INFLATION
 They add in efficiencies in the market, and
make it difficult for companies to budget or
plan long-term.
 Uncertainty about the future purchasing power
of money discourages investment and saving
 There can also be negative impacts to trade
from an increased in stability incurrency
exchange prices caused by unpredictable
inflation.
 Higher income tax rates.
 Inflation rate in the economy is higher than
rates in other countries; this will increase
imports and reduce exports, leading to a deficit
in thE

11. EXAMPLES

Increase

Increase
oil

Increase

Increase
in the price of wheat
in the price of world
in the price of rice
in the price of CNG

12. STAGFLATION
 A condition of slow economic growth and
relatively high unemployment accompanied
by inflation.
 This happened to a great extent during the
1970s, when world oil prices rose
dramatically, fueling sharp inflation in
developed countries.

13. PHILLIPS CURVE

In1958,a New Zealand economist, A.W.H. Phillips
proposed that there was a trade-off between
inflation and unemployment.

The lower the unemployment rate, the higher
was the rate of inflation.

Governments simply had to choose the right
balance between the two evils.

Economies did seem to work like this in the
1950s and 1960s, but then the relationship broke
down.

14. The Phillips curve

15. THE PHILLIPS CURVE
o 1958 – Professor A.W.Phillips
o Expressed a statistical relationship between the
rate of growth of money wages and
unemployment from 1861–1957.
o Rate of growth of money wages linked to
inflationary pressure
o Led to a theory expressing a trade – off between
inflation and unemployment

16. Wage growth %
(inflation)
2.5%
1.5%
The Phillips Curve shows an inverse
relationship between inflation and
unemployment. It suggested that If
governments wanted to reduce
unemployment it had to accept higher
inflation as a trade-off
Money illusion–wage rates rising but
individuals not factoring in inflation on
real Wage rate

17. The phillips curve

Problems:

1970s – Inflation and unemployment rising at the
same time – stagflation

Phillips Curve redundant?
 was it moving?
Or

18. The phillips curve
 Where the long run Phillips Curve cuts the
horizontal axis would be the rate of
unemployment at which inflation was constant –
the so – called Non –Accelerating Inflation Rate of
Unemployment (NAIRU)
 To reduced unemployment
To below the natural rate would necessitate
1 Influencing expectations–persuading
Individuals that inflation was going to fall
2 Boosting the supply side of the economy-increase
capacity(pushing the PC curve out wards)

19. END
THANK YOU