inflation

Inflation

and it’s

#effects#

On different

income groups…

The Flow Of Presentation

Introduction various income groups Factors affecting Inflation India’s scenario Effects on various income groups Conclusion- Remedies

Introduction

What is Inflation? World Bank Definition Calculation methods  

CONSUMER  PRICE  INDEX                                                                                    WHOLESALE  PRICE  INDEX    

                                                                                                                                                       ≈COST PRICE INDEX≈                                                                                                                                                                                                                        UPDATED  COST                                                              CPI      =                                                                                                      X  100                                                                                                                              BASE  PRICE  COST                                                                                                              

≈WHOLESALE PRICE INDEX≈      

                                                                                                       WPI  IN  SAME  MONTH  OF  PREVIOUS  YEAR                                                                                                                                                                                                                                                X  100          WPI  IN  MONTH  OF  CURRENT  YEAR-­‐WPI  IN  SAME  MONTH  OF  PREVIOUS  YEAR                                                                                                                                                                                                                                                                                                                                            

5  

Various  Income  Groups  (According  To  Major  Occupa9ons)  

(India)  

6  

investors

Fixed income groups

business community

Salary earners

government

workers

Wage earners

farmers

Factors Affecting Inflation Demand pull Cost push Exchange rate

Demand Pull Inflation:

15  

Cost Push Inflation:

16  

Scenario of India •  BOOSTERS TO THE ECONOMY - 32000 Crs

•  CUT IN EXCISE DUTY—2 %

•  BUYING BACK OF GOVERNMENT SECURITIES

•  INCREASE IN BORROWINGS FROM RBI

•  PUMPING BAILOUTS

•  RISE IN PRICES OF FOOD PRODUCTS

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18  

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Effects On Various Income Groups

Income tax slabs

-Below 2.5 lakhs -2.5 to 5 lakhs -5 to 10 lakhs -10 lakhs and above Urban Socio economic classification

Effects On Various Income Groups !

!Below 2.5 lakhs    

                                                                      Food sector~High

Manufacturing sector- Consumer goods:~High Capital goods:~Low Non- Manufacturing Sector- Infrastructure:~high Education:~High Energy: Petrol, Electricity, Oil~high

Effects On Various Income Groups !

!From 2.5 to 5 lacs    

                                                                      Food sector~High

Manufacturing sector- Consumer goods:~High Capital goods:~MODERATE Non- Manufacturing Sector- Infrastructure:~MODERATE Education:~High Energy: Petrol, Electricity, Oil~high

Effects On Various Income Groups !

!From 5 to 10 lacs    

                                                                      Food sector ~LOW

Manufacturing sector- Consumer goods:~LOW Capital goods:~HIGH Non- Manufacturing Sector- Infrastructure:~high Education:~LOW Energy: Petrol, Electricity, Oil~high

Effects On Various Income Groups !

!10 lacs and above!

                                                                      Food sector~LOW

Manufacturing sector- Consumer goods:~LOW Capital goods:~moderate Non- Manufacturing Sector- Infrastructure:~moderate Education:~LOW Energy: Petrol, Electricity, Oil~LOW

Conclusion-Remidies

Fiscal Policies: •  Reduced Government Expenditure •  Increase in Taxes

Monetary Policies: •  Bank Rate

•  Cash Reserve Ratio

•  Open Market Operations •  Statutory Liquidity Ratio

webliography  •  www.crisil.com  

•  hDp://www.allbankingsolu9ons.com/DATA.htm  

•  hDp://ar9cles.economic9mes.india9mes.com/2012-­‐07-­‐13/news/32663798_1_india-­‐growth-­‐story-­‐lower-­‐growth-­‐incomes-­‐rise    

•  hDp://financeminister.in/latest-­‐india-­‐income-­‐tax-­‐slabs  

•  hDp://scn.sap.com/docs/DOC-­‐56507  

•  hDp://www.fnbnews.com/ar9cle/detnews.asp?ar9cleid=34857&sec9onid=1    

•  hDp://www.livemint.com/Poli9cs/FD9G5mJJTe5v8RjrkluhwL/India-­‐CPI-­‐tops-­‐es9mate-­‐in-­‐test-­‐for-­‐Rajan-­‐as-­‐industry-­‐modera.html  

•  hDp://economic9mes.india9mes.com/news/economy/indicators/fall-­‐in-­‐rain-­‐deficit-­‐monsoon-­‐situa9on-­‐shows-­‐significant-­‐improvement/ar9cleshow/39907428.cms  

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