Principles of Economics

ASSIGNMENT FOR UNIT 1 & 3

Name: Mahi Shah

Dept.: IMBA BI
Roll no.: 26
1. Discuss the practical uses of calculation of national income in India.
Practical uses of calculation of national income in India-
Economic Growth Measurement: National income serves as a key metric for measuring
economic growth by quantifying a country's total economic output, tracking trends, informing
policy decisions, assessing living standards, and comparing economic sectors. It offers a
snapshot of an economy's health and guides efforts to promote sustainable development.

Policy Formulation and Evaluation: Governments use national income data to formulate and
evaluate economic policies. These policies might include fiscal policies (taxation and
government spending), monetary policies (interest rates and money supply), and trade
policies. Policymakers use it to design effective strategies for growth, employment, and
income distribution. They also assess the impact of policies by tracking changes in national
income over time. The data also helps in understanding the impact of these policies on
economic growth, inflation, and employment.
Resource Allocation: National income data assists in resource allocation by guiding
policymakers to allocate resources efficiently. It helps identify sectors that are
contributing the most to the economy and those that might need more investment or
support. It highlights sectors driving economic growth, enabling targeted investments. It
also aids in prioritizing areas like education, healthcare, and infrastructure, ensuring
balanced development and improved living standards.

Budget Planning: National income figures assist in estimating government revenue and
expenditure. The data also guides budget planning by allocating funds to key sectors,
prioritizing spending, managing deficits, and designing economic stimulus measures when
needed.

Investment Decision Making: Businesses and investors use national income data to make
informed decisions about where to invest their resources. Investors use this data to assess
growth prospects, stability, and potential returns. High GDP growth rates might attract
more investment, while declining GDP growth might lead to more cautious investment
decisions.
Employment Analysis: National income data aids in employment analysis by revealing the
economic health of a country. It indicates growth trends, which impact job creation, and
guides policymakers in addressing unemployment through targeted interventions and
improve job creation.

Inflation Monitoring: National income data contributes to inflation monitoring by providing

insights into an economy's overall health. Rising national income can indicate increased
economic activity, potentially leading to higher demand and inflationary pressures.
Policymakers use this information to implement measures that maintain price stability.

Forecasting and Planning: National income data, along with other economic indicators, is
used to forecast economic trends. Businesses, government agencies, and researchers use
these forecasts for planning and decision-making. It helps predict economic trends, guide
resource allocation, inform policy decisions, and anticipate changes in sectors, facilitating
effective long-term planning.
In summary, national income statistics play a crucial role in shaping economic policies,
informing investment decisions, and providing insights into the overall economic health of India.
They are a valuable tool for both policymakers and various stakeholders in the economy.

Now, let's consider an example using the expenditure approach, which considers the total
spending in the economy to estimate the national income. In India, this can be seen through the
calculation of Gross Domestic Product (GDP) using the expenditure approach.

Suppose the government of India decides to invest in infrastructure projects, such as building
new roads and bridges. This investment leads to an increase in government spending (G), which
is a component of the GDP formula. Additionally, these infrastructure projects create job
opportunities, leading to increased income for workers, which in turn boosts consumer spending
(C), another component of GDP.

As a result of increased government spending and subsequent consumer spending, businesses

start experiencing higher demand for their goods and services. To meet this demand, businesses
may expand production, leading to higher levels of investment (I) in the economy. Investment is
another component of GDP.

Moreover, these infrastructure projects might also attract foreign investors or tourists due to
improved connectivity and facilities. This influx of foreign currency can be accounted for in the
net exports (X - M) component of GDP, where X represents exports and M represents imports. If
the exports increase as a result of increased tourist activity or foreign investment, it would
positively impact the GDP calculation.

In this example, the increase in government spending, consumer spending, investment, and
potentially exports due to the infrastructure projects would contribute to a higher GDP figure.
By quantifying these expenditures and calculating their cumulative effect, economists can
estimate the growth and health of the Indian economy using the national income accounting
framework.
2. Analyze the effects of the COVID-19 pandemic on the national
income of India.
From April to June 2020, India’s GDP dropped before 2020 – in 1958, 1966, 1973 and 1980 –
by a massive 24.4%. According to the latest with the largest drop being in 1980 (5.2%). This
national income estimates, in the second means that 2020/21 is the worst year in terms
quarter of the 2020/21 financial year (July to of economic contraction in the country’s
September 2020), the economy contracted by a history, and much worse than the overall
further 7.4%. The recovery in the third and contraction in the world.
fourth quarters (October 2020 to March 2021)
was still weak, with GDP rising 0.5% and 1.6%, Effect of COVID-19 on income, consumption,
respectively. This means that the overall rate of poverty and unemployment in India:
contraction in India was (in real terms) 7.3% for
the whole 2020/21 financial year. Both wealth and income inequality has been on
In the post-independence period, India's the rise in India. Estimates suggest that in
national income has declined only four times 2020, the top 1% of the population held 42.5%
of the total wealth, while the bottom 50% had the first lockdown (in August 2020 compared
only 2.5% of the total wealth. Post-pandemic, with August 2019), and remained 15% lower
the number of poor in India is projected to have year-on-year by the end of 2020.Microdata
more than doubled and the number of people in from the largest private survey in India, CMIE’s
the middle class to have fallen by a third. ‘Consumer Pyramids Household Survey’
During India’s first stringent national lockdown (CPHS), show that per capita consumption
between April and May 2020, individual income spending dropped by more than GDP, and did
dropped by approximately 40%. The bottom not return to pre-lockdown levels during
decile of households lost three months’ worth periods of reduced social distancing. Average
of income. Microdata from the largest private per capita consumption spending continued to
survey in India, CMIE’s ‘Consumer Pyramids be over 20% lower after the first lockdown (in
Household Survey’ (CPHS), show that per August 2020 compared with August 2019) and
capita consumption spending dropped by more remained 15% lower year-on-year by the end of
than GDP, and did not return to pre-lockdown 2020. Based on the latest CPHS data, rural
levels during periods of reduced social poverty increased by 9.3 percentage points and
distancing. Average per capita consumption urban poverty by over 11.7 percentage year-on-
spending continued to be over 20% lower after year from December 2019 to December 2020.
Earlier months of the CPHS show that rural poverty increased by 14.2 percentage points and urban
poverty by 18.1 percentage points. Yet the actual increase in poverty due to Covid-19 is likely to be
higher than what the CPHS data suggest, as indicated by other surveys.

Effects of COVID-19 on different sectors:

Food & Agriculture

Since agriculture is the backbone of the country and a part of the government announced essential
category, the impact is likely to be low on both primary agricultural production and usage of agro-
inputs. Several state governments have already allowed free movement of fruits, vegetables, milk etc.
Online food grocery platforms are heavily impacted due to unclear restrictions on movements and
stoppage of logistics vehicles. RBI and Finance Minister announced measures will help the industry
and the employees in the short term. Insulating the rural food production areas in the coming weeks
will hold a great answer to the macro impact of COVID-19 on Indian food sector as well as larger
economy.

Aviation & Tourism

The contribution of the Aviation Sector and Tourism to our GDP stands at about 2.4% and 9.2%
respectively. The Tourism sector served approximately 43 million people in FY 18-19. Aviation and
Tourism were the first industries that were hit significantly by the pandemic. The common consensus
seems to be that COVID will hit these industries harder than 9/11 and the Financial Crisis of 2008.
These two industries dealt with severe cash flow issues since the start of the pandemic and were
staring at a potential 38 million lay-offs, which translated to 70 per cent of the total workforce. The
impact fell on both, White and Blue-collar jobs. According to IATO estimates, these industries might
incur losses of about 85 billion Rupees due to travel restrictions. The Pandemic also brought about a
wave of innovation in the fields of contactless boarding and travel technologies.

Telecom
There had been a significant number of changes in the telecom sector of India even before the Covid-
19 due to brief price wars between the service providers. Most essential services and sectors
continued to run during the pandemic due to the implementation of ‘work from home’. With over 1
billion connections as of 2019, the telecom sector contributes about 6.5 per cent of GDP and employs
almost 4 million people. Increased broadband usage had a direct impact and resulted in pressure on
the network. Demand increased by about 10%. However, the Telco’s braced for a sharp drop in adding
new subscribers. As a policy recommendation, the government can aid the sector by relaxing the
regulatory compliances and provide moratorium for spectrum dues, which can be used for network
expansions by the companies.
Pharmaceuticals
The pharmaceutical industry had been on the rise since the start of the Covid-19 pandemic, especially
in India, the largest producer of generic drugs globally. With a market size of $55 billion during the
beginning of 2020, it had been surging in India, exporting Hydroxychloroquine to the world, esp. to the
US, UK, Canada, and the Middle East.
There had been a rise in the prices of raw materials imported from China due to the pandemic. Generic
drugs were the most impacted due to heavy reliance on imports, disrupted supply-chain, and labor
unavailability in the industry, caused by social distancing. Simultaneously, the pharmaceutical
industry was struggling because of the government-imposed bans on the export of critical drugs,
equipment, and PPE kits to ensure sufficient quantities for the country. The increasing demand for
these drugs, coupled with hindered accessibility made things harder.

Oil and Gas

The Indian Oil & Gas industry is quite significant in the global context – it is the third-largest energy
consumer only behind USA and Chine and contributes to 5.2% of the global oil demand. The complete
lockdown across the country slowed down the demand of transport fuels (accounting for 2/3rd
demand in oil & gas sector) as auto & industrial manufacturing declined and goods & passenger
movement (both bulk & personal) fell. Though the crude prices dipped in this period, the government
increased the excise and special excise duty to make up for the revenue loss, additionally, road cess
was raised too. As a policy recommendation, the government may think of passing on the benefits of
decreased crude prices to end consumers at retail outlets to stimulate demand.

Fiscal Deficit
The Covid-19 pandemic did not affect our fiscal deficit and disinvestment target much. In that year’s
union budget, Finance minister Nirmala Sitharaman announced a fiscal deficit target of 6.8% for 2021
to 2022. India’s fiscal deficit for 2020-21 zoomed to 9.5% of GDP as against 3.5% projected earlier.
Our finance minister promised to achieve a fiscal deficit of 4.5% of GDP by 2025-26 by increasing the
steaming tax revenues through increased tax compliance as well as asset monetization over the
years. According to the medium-term fiscal policy statement that the government had presented in
February 2020, the fiscal deficit for 2021-22 and 2022-23 was at 3.3% and 3.1% respectively.
 3. Explain different types of banks existing in India.
BANK CLASSIFICATION IN INDIA

Commercial Small Finance Banks Payments Banks Co-operative

Banks Banks

Public Sector Urban co op.

Foreign State co op.

Private Sector
RRB
SCHEDULED BANKS
Scheduled banks are covered under the 2nd Schedule of the Reserve Bank of India Act, 1934. It has
a minimum paid-up capital of Rs. 5 lakhs. It requires to satisfy the central bank that its affairs are
not carried out in a way that causes harm to the interest of the depositors. And it should be a
corporation rather than a sole-proprietorship or partnership firm. They are classified as follows:
Nationalized Banks, Foreign Banks, Regional Rural Banks, State Bank of India and its Associates &
Other Scheduled Commercial Banks. Further, Scheduled Co-operative Banks are divided into two
categories: Scheduled State Co-operative Banks & Scheduled Urban Co-operative Banks

NON-SCHEDULED BANKS
Non-scheduled banks refer to the local area banks which are not listed in the Second Schedule of
Reserve Bank of India. Non-Scheduled Banks are also required to maintain the cash reserve
requirement, not with the RBI, but with them. The bank must be a company, rather than a sole
proprietorship or partnership.
 COMMERCIAL BANKS
Commercial Banks are regulated under the Banking Regulation Act, 1949 and their business
model is designed to make profit. Their primary function is to accept deposits and grant loans
to the general public, corporate and government. Commercial banks can be divided into-

Public sector banks Foreign banks Private sector banks Regional Rural Banks
These are the nationalised A foreign bank is one that These include banks in These are also scheduled
banks and account for more has its headquarters in a which major stake or equity commercial banks, but they are
than 75 per cent of the total foreign country but operates is held by private established with the main
banking business in the in India as a private entity. shareholders. All the objective of providing credit to
country. Majority of stakes in These banks are under the banking rules and weaker sections of the society
these banks are held by the obligation to follow the regulations laid down by the like agricultural laborers,
government. In terms of regulations of its home RBI will be applicable on marginal farmers and small
volume, SBI is the largest country as well as the private sector banks as well. enterprises. They provide
public sector bank in India country in which they are banking and financial services
and after its merger with its operating. to rural areas, disburse wages of
5 associate banks it has got MGNREGA workers, distribute
a position among the top 50 pension, provide debit/credit
banks of the world. cards, locker facilities etc.
Public Sector Banks Foreign Banks Private Sector Banks RRBs
There are a total of 12 Given below is the list of Given below is the list of Gujarat
nationalized banks in foreign banks operating in private-sector banks in Baroda Gujarat Gramin
the country namely India – India- Bank
below: DBS Bank India Limited Axis Bank Saurashtra Gramin Bank
Bank of Maharashtra Industrial & Commercial IndusInd Bank
Indian Bank Bank of China Ltd. Bandhan Bank Maharashtra
Bank of Baroda Credit Agricole Corporate & Jammu and Kashmir Bank Maharashtra Gramin Bank
Punjab & Sind Bank Investment Bank Karnataka Bank Vidharbha Konkan Gramin
Bank of India Societe Generale Dhanlaxmi Bank Bank
Punjab National Bank Deutsche Bank Kotak Mahindra Bank
Canara Bank HSBC Bank DCB Bank Karnataka
State Bank of India Industrial Bank of Korea Karur Vysya Bank Karnataka Gramin Bank
Central Bank of India Standard Chartered Bank HDFC Bank Karnataka Vikas Grameen-
Union Bank of India Bank of China ICICI Bank a Bank
Indian Overseas Bank American Express Banking IDFC Bank
UCO Bank Corporation IDBI Bank Punjab
Bank of America Tamilnad Mercantile Bank Punjab Gramin Bank
Citibank YES Bank
J.P. Morgan Chase Bank N.A.
SMALL FINANCE BANKS
This is a niche banking segment in the country and is aimed to provide financial inclusion to sections
of the society that are not served by other banks. The main customers of small finance banks
include micro industries, small and marginal farmers, unorganized sector entities and small business
units. These are licensed under Section 22 of the Banking Regulation Act, 1949 and are governed by
the provisions of RBI Act, 1934 and FEMA. Given below are some examples-
AU Small Finance Bank Ltd., Jana Small Finance Bank Ltd., North East Small Finance Bank Ltd.,
ESAF Small Finance Bank Ltd., Equitas Small Finance Bank Ltd., Utkarsh Small Finance Bank Ltd.,
Fincare Small Finance Bank Ltd., Ujjivan Small Finance Bank Ltd., Shivalik Small Finance Bank Ltd.

PAYMENTS BANKS
The main objective of this type of bank is to advance financial inclusion by offering banking and
financial services to the unbanked and underbanked areas, helping the migrant labor force, low-
income households, small entrepreneurs etc. The amount is currently limited to Rs. 2 Lakh per
customer. They also offer services like ATM cards, debit cards, net-banking and mobile-banking.
India currently has 6 Payment Banks namely- Airtel Payment Bank, India Post Payment Bank, Fino,
Paytm Payment Bank, NSDL Payment Bank and Jio Payment Bank.
CO-OPERATIVE BANKS
Co-operative banks are registered under the Cooperative Societies Act, 1912 and they are run by an
elected managing committee. These work on no-profit no-loss basis and mainly serve entrepreneurs,
small businesses, industries and self-employment in urban areas. In rural areas, they mainly finance
agriculture-based activities like farming, livestock and hatcheries.

Urban Co-operative Banks: They refer to the primary cooperative banks located in urban and semi-
urban areas. These banks essentially lent to small borrowers and businesses centered around
communities, localities workplace groups. According to the RBI, on 31st March, 2003 there were
2,104 Urban Co-operative Banks of which 56 were scheduled banks. About 79% of these are located
in five states, – Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu.

State Co-operative Banks: A State Cooperative Bank is a federation of the central cooperative bank
which acts as custodian of the cooperative banking structure in the State. Its funds are obtained
from the social capital, deposits, loans and overdrafts of the Reserve Bank of India.
4. Explain the functions of the Reserve Bank of India

1) Monetary Management/Authority
One of the most important functions of RBI is the formulation and execution of Monetary Policy
and securing monetary stability in India. It functions the currency and credit system to its
advantage.

2) Supervision and Regulation of Banking and Non-Banking Financial Institutions

RBI functions to protect the Interest of depositors through an effective regulatory framework.
Keeping a keen eye over the conduct of banking operations and solvency of the banks along
with maintaining the overall financial stability through various policy measures.
These powers of RBI come from RBI Act 1934 and Banking Regulation Act 1949.
This regulatory and supervisory function of the RBI extends to Indian Banking System as well as
Non-Banking Financial Institutions.

3) Regulation of Foreign Exchange Market, Government Securities Market, and Money Market
Foreign Exchange Market: The Foreign Exchange Management Act 1999 came into light after
the liberalization measures introduced in 1991. FEMA 1991 replaced the FERA1973 and came into
effect in June 2022.
So now, the RBI is responsible to oversee the foreign exchange market in India. RBI supervises
and regulates the Foreign Exchange Market through the provision of the FEMA Act 1999.
Government Securities Market: RBI regulates the trade securities issued by the Central and
State governments. For regulation of this, RBI derives its power from the RBI Act of 1934.
Money Market: Short-term and highly liquid debt securities are also regulated by RBI and for
this RBI derives its powers from the RBI Act 1934.

4) Foreign Exchange Reserve Management

Foreign exchange reserve includes-
Foreign Currency Assets (FRAs), Special Drawing Rights (SDRs) and Gold
RBI is the custodian of India’s foreign exchange reserves. The legal provision regarding the
management of foreign exchange reserves is mentioned in RBI Act 1934.
The RBI Act of 1934 permits the RBI to invest these foreign exchange reserves in the following
instruments-
Deposit with Banks for International Settlement
Deposit with foreign Commercial Banks
Debt Instruments
Other instruments with approval of the Central Banks of RBI
5) Bankers to Central and State Government
RBI acts as a banker to the government. RBI is the responsible agency for receiving and paying
money on behalf of the various government departments.
RBI is also authorized to appoint other banks to act as its agent and undertake banking business
on the behalf of the government.
RBI maintains Central and State Government funds like Consolidated Funds, Contingency
Funds, and Public Account.
RBI also provides loans to the central/State/UT Government as a banker to the government.

6) Advisor to the Government

RBI acts as an advisor to the government when called upon to do so on financial and banking-
related matters.

7) Central and State Government’s Debt Manager

The debt management policy mainly aims at minimizing the cost of borrowing and smoothening
the maturity structure of debt. RBI manages the public debt and also issue new loans on behalf
of central and state government.

8) Banker to Banks
Banks open their current account with RBI to maintain SLR and CRR.
RBI is a common banker for the different banks that enables the settlement of interbank
transfers of funds.
For special purposes or in need, RBI provides short-term loans and advances to banks.

9) Lender of last resort

That means RBI comes to rescue the banks that are insolvent (facing temporary liquid problems)
but have not gone bankrupt. RBI provides this facility to protect the interest of depositors and to
prevent the possible failure of the bank.

10) Issuer of Currency

The RBI and the government are in charge of the creation, manufacturing, and overall
administration of the national currency with the aim of releasing a sufficient quantity of
authentic and clean notes.
The Reserve Bank of India has given some bank branches permission to set up currency chests
in order to simplify the circulation of rupee notes and coins around the nation (A currency chest
is a storehouse where currency notes and rupee coins are stocked on behalf of RBI).

11) Developmental Role

RBI’s developmental role includes creating institutions to build financial infrastructure, ensuring
credit to the productive sector of the economy, and expanding access to affordable financial
systems.
Priority Sector Lending
As per RBI, priority sectors are those sectors of the economy that may not get timely and
sufficient credit in the absence of these special schemes.
A list of Priority Sectors is-
Agriculture, MSME, Export, Education, Housing, Social Infrastructure, Renewable Energy and
Weaker Sections.

12) Data Dissemination/Policy Research

Such research undertaken by RBI focuses on issues and problems arising at the national and
international levels, having a critical impact on the Indian economy.
India is a signatory of Special Data Dissemination Standards (SDDS) as defined by IMF for the
purpose of releasing data.
RBI has some legal obligations over it under RBI Act. One of them is to publish two reports every
year. One is, the Annual Report, and the other is the Report on Trends and Progress of Banking
in India.
RBI conducts Consumer Confidence Survey and Inflation Expectation Survey on a quarterly
basis.
5. Explain how the introduction of money has led to the expansion of
markets?
Efficiency in Trade:
Before the introduction of money, barter systems were prevalent, where goods and services were
exchanged directly. Barter systems had limitations as they required a double coincidence of
wants. Money simplified this process by providing a common measure of value, making
transactions more efficient. Example in India: In ancient India, various commodities like grains,
spices, and metals were used in barter. The introduction of standardized coins, such as punch-
marked coins in the 6th century BCE, made trade more efficient by providing a widely accepted
medium of exchange. The introduction of coins made trade more efficient. Merchants and traders
could now use a universally accepted medium of exchange. This encouraged trade not only
within individual kingdoms but also across regions and with neighboring civilizations.

Market Expansion & Specialization:

Individuals and businesses could specialize in producing specific goods or services. This
specialization led to increased productivity and diversity in the market as people could focus on
what they were best at. With coins in circulation, marketplaces known as "sreni" or "shreni"
developed in various parts of India. These were essentially guilds or associations of merchants
who organized trade, regulated prices, and ensured fair practices. As a result, these markets
expanded in size and complexity. Example in India: In historical India, the specialization of
artisans and craftsmen in producing textiles, jewelry, pottery, and other goods was facilitated by
the use of currency, leading to a thriving market for these products.

Cross-Cultural Trade and better Reach:

Money allowed for trade to occur beyond local and regional boundaries. Traders and merchants
could engage in long-distance trade, leading to the exchange of goods and ideas over vast
distances. India's strategic location on the ancient Silk Road made it a hub for international
trade. Coins played a crucial role in facilitating trade with foreign merchants, including those
from Rome, China, and the Middle East. This led to a cross-cultural exchange of goods and ideas.
Indian spices, textiles, and other goods were traded along this route.

Economic Growth:
The introduction of coins also contributed to economic growth. People could now accumulate
wealth more easily, and this led to the rise of a monetized economy. This facilitated the formation
of capital, which could be invested in businesses and ventures, further stimulating economic
growth. It also allowed for greater specialization of labor and the development of more complex
economic activities. Example in India: During the medieval period, the Chettiars, a Tamil
merchant community, played a significant role in lending money and financing trade. They
accumulated wealth through moneylending, contributing to economic expansion.

Financial Instruments & Tax Collection:

The use of money also led to the development of financial instruments such as bills of exchange,
promissory notes, and banking systems, which provided avenues for raising capital and
managing financial transactions. Coins were used to pay taxes to the rulers. The state's ability to
collect taxes in a standardized currency enhanced its administrative capacity, leading to the
growth of powerful kingdoms and empires. Example in India: India had a well-developed system
of banking and credit during the Maurya and Gupta periods. Money facilitated the growth of
these financial institutions.

Overall, the introduction of money in the form of coins had a profound impact on the Indian
market. It transformed economic systems by making trade more efficient, enabling
specialization, expanding the geographical reach of markets, fostering capital formation, and
leading to the development of financial instruments. These factors collectively contributed to
the expansion and development of markets in India and beyond.
 %
Avg % G
GDP (PPP) of world Populatio % of world
Year GDP per capita(1990 dollars) DP Period
(1990 dollars) GDP (PPP n population
growth
)

33,750,000,0 70,000,0
1 450 — 32.0 30.03 Classical era
00 00

33,750,000,0 72,500,0
1000 450 0.0 28.0 27.15 Early medieval era
00 00

60,500,000,0 79,000,0
1500 550 0.117 24.35 18.0 Late medieval era
00 00
The Indian subcontinent had the largest economy of any region in the world for most of the interval
between the 1st and 18th centuries. Until 1000 AD, India had an incredibly prosperous economy
constituting to around 33% worlds GDP or 1/3 of the whole world.

India experienced
deindustrialization and cessation
of various craft industries under
British rule, which along with
fast economic and population
growth in the western world,
resulted in India's share of the
world economy declining from
24.4% in 1700 to 4.2% in 1950,
and its share of global industrial
output declining from 25% in
1750 to 2% in 1900. From 1850
to 1947, India's GDP grew from
$125.7 billion to $213.7 billion, a
70% increase, or an average
annual growth rate of 0.55%.
6. Give an overview about the history of inflation prevailing in India
in the past 10 years.
FY 2013 FY 2014 FY 2015
Inflation at start of the year: Inflation at start of the year: Inflation at start of the year:
6.62% 8.79% 5.11%
Inflation at the end of the year: Inflation at the end of the year: Inflation at the end of the year:
6.16% 5% 6.16%
Factors: higher cost of food, Factors: Slows to 24-Month Low Factors: CPI inflation rose as
more expensive imports due to due to lower food prices, country changed the base year
falling rupee, July's WPI was consumer prices accelerated for for calculating consumer prices,
highest in six months, speed up two months straight, food prices higher food prices then dragged
due to higher prices for food and increased and slowed lightly, down, cost of transport, prices of
energy, eight-month high of 7% annual food inflation accelerated fuel and light advanced at a
due to higher prices of fuel and to 9.42 percent then food prices faster pace, consumer prices
manufactured goods, vegetable kept its downward trend record accelerated for the fifth straight
prices, mainly onions, slowed due of 4.38%. month, reaching the highest
to a new harvest. since September.
FY 2016 FY 2017 FY 2018
Inflation at start of the year: Inflation at start of the year: Inflation at start of the year:
5.69% 3.17% 5.07%
Inflation at the end of the year: Inflation at the end of the year: Inflation at the end of the year:
5% 5% 2.19%
Factors: highest figure since Factors: lowest inflation rate- Factors: Cost of food and
August of 2014, Food inflation sharp slowdown in food prices, beverages, housing and fuel and
was biggest in seventeen lowest inflation rate of 2.99% light grew at a slower pace,
months, Consumer inflation since the series began in 2012 Prices of housing and clothing &
eased due to slowdown in food further sinking to 2.18% and footwear rose at a faster pace
cost, food inflation increased to 1.54%. Cost of housing, energy while food inflation was almost
7.55% most in 21 months, lowest and clothing rose further, and unchanged, inflation remained
inflation rate in five months due food prices fell at a softer pace, above the central bank's
to less rice in food prices, 2-Year high inflation rate by rising cost medium-term target for
Low rate of 3.6% In November, of food and fuel, CPI increased 9months, lowest inflation rate
slowdown in inflation intensified 5.21 percent year-on-year in since October 2017, low food
after a demonetization campaign December of 2017. inflation, inflation in India
slumped currency in circulation, declined to 2.33% and slowed
hurting consumption. further.
FY 2019 FY 2020 FY 2021
Inflation at start of the year: Inflation at start of the year: Inflation at start of the year:
2.05% 7.59% 4.06%
Inflation at the end of the year: Inflation at the end of the year: Inflation at the end of the year:
7.3% 4.59% 5.66%
Factors: deflation in food items Factors: Prices rose faster for Factors: inflation rate being
and a sharp fall in fuel inflation, fuel and light, miscellaneous, lowest in 16 months, higher
Food prices rose for the first time clothing and footwear and pan, commodity prices and economic
in six months, Rate jumps to 1- tobacco and intoxicants but recovery, global commodity
1/2-year high. Main upward eased for housing. Cost of food price-driven pressures remained
pressure came from cost of food and beverages increased. a concern, inflation rate eased to
and beverages (12.16%), The food Inflation was revised lower to 4.35% in september which is 5-
alone rate jumped to 14.12%, 5.84%. Figures for April and May month low. Consumer prices
Other increases were seen for of 2020 were released only with dropped 0.36 percent in
miscellaneous (4.09%), fuel and the June ones. Rate Highest December, the first decline in 11
light (0.7%), clothing and Since 2014-7.61% further slowing months.
footwear (1.5%), housing (4.3%) down and being lowest.
and pan, tobacco and intoxicants
(3.4%).
FY 2022
Inflation at start of the year:
6.01%
Inflation at the end of the year:
5.72%
Factors: Started off by a 7-month
high rate due to base effect, full
effect of crude oil price rises will
be seen in April only as the
government delayed the pass-
through of energy prices to
consumers, recording the biggest
rises as erratic rainfall impacted
the local crops and supply shock
from the Russian invasion of
Ukraine remained, Inflation Rate
Slows to 11-Month Low at the end
of the year.
Thank you!