me inflation final

8/3/2019 ME Inflation Final

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Table of Contents

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S.No. Topic

1. Introduction

2. Costs of Inflation

3. Price Indices

4. Causes of inflation

5. Inflationary Trend in India

6. Policies to control Inflation

7. Inflation : A necessary Evil

8. Lessons Learnt and Way Ahead


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Executive Summary

In the following paper, an attempt has been made to examine the nature

and causes of inflation, in the general context as well as with respect to

India. We have covered the various types of inflation, the detrimental

impact of inflation to an individual and economy as well as measures of

inflation. With respect to the price indices, we have examined the

advantages and disadvantages of the two price indices namely CPI and

WPI and provided an analysis of both in the Indian context.

The causes of inflation are many, but we have focused on those relevant

to the Indian economy namely demand-pull, cost-push, expectation

induced and fiscal deficit. We have given an account of the inflationary

trend in India over the past 18 months and analysed the same in five

phases.

We have also examined the role of fiscal policy and monetary policy in

controlling and managing inflation. The policies and tools used by the

government of India in recent times have been focused upon and their

impact on inflation in India has been analysed.

Lastly we have tried to give a holistic explanation of the nature of inflation

by looking at why inflation is necessary and the benefits of moderate

inflation rates.

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1. Introduction:

What Is Inflation?

Inflation is defined as a sustained increase in the general level of prices

for goods and services. It is measured as an annual percentage increase.

As inflation rises, every dollar you own buys a smaller percentage of a

good or service. The value of a dollar does not stay constant when there is

inflation. The value of a dollar is observed in terms of purchasing power,

which is the real, tangible goods that money can buy. When inflation goes

up, there is a decline in the purchasing power of money. For example, if

the inflation rate is 2% annually, then theoretically a $1 pack of gum will

cost $1.02 in a year. After inflation, your dollar can't buy the same goods

it could beforehand

Variants of Inflation

Deflation is when the general level of prices is falling. This is the

opposite of inflation

Disinflation, represents a period when the inflation rate is positive,

but declining over time

Hyperinflation is unusually rapid inflation. One of the most notable

examples of hyperinflation occurred in Germany in 1923, when

prices rose 2,500% in one month

Stagflation is the combination of high unemployment and

economic stagnation with inflation. This happened in industrialized

countries during the 1970s, when a bad economy was combined

with OPEC raising oil prices

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2. Costs of Inflation :

Price inflation has immense effect on the Time Value of Money

(TVM)1. This acts as a principal component of the rates of interest,

which forms the basis of all TVM calculations. The real or estimated

changes occurring in the rates of inflation lead to changes in the

rates of interest as well.

Relative price variability- Inflation distorts relative prices. Consumer

decisions are distorted, and markets are less able to allocate

resources to their best use

Inflation-Induced Tax Distortion- Inflation exaggerates the size of

capital gains and increases the tax burden on this type of income.

With progressive taxation, capital gains are taxed more heavily.

Arbitrary Redistribution of Wealth - Unexpected inflation

redistributes wealth among the population in a way that has nothing

to do with either merit or need

Competitiveness and Unemployment2 - Inflation is a possible cause

of higher unemployment in the medium term if one country

experiences a much higher rate of inflation than another, leading to

a loss of international competitiveness and a subsequent worsening

of their trade performance

1 http://www.economywatch.com/inflation/effects.html

2 http://tutor2u.net/economics/revision-notes/a2-macro-consequences-of-inflation.html

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3. P rice Indices

The inflation rate is the percentage increase in the overall level of prices.

An inflationary situation does not mean that all prices are rising without

exception. Since many goods & services are produced in economy, some

prices may actually be falling and others may be rising at any point of

time. But if the price of only one/very few goods goes up, then it is not

inflation. It is inflation; if the prices of most goods go up. A price index is a

measure of the average level of prices for some specified set of goods and

services, relative to the prices in a specified base year.

Different prices indexes are:

1. Consumer price index

2. Wholesale price index

CPI:

A consumer price index (CPI) measures changes in the price level

ofconsumer goodsand services purchased by households. CPI is a

measure of inflation based on what average consumer pays. It measures

cost of buying a fixed basket of goods and services by consumers. The CPI

is a weighted average of prices. The weight on each price reflects that

goods relative importance in the CPIs basket. The weights remain fixed

over time. This is a measure of the average change over time in the prices

paid by consumers for a market basket of consumer goods and services.

Hhousehold survey is conducted to find out consumption of a typical

household. CPI is released on monthly basis. It is used to

track changes in the typical households cost of living

adjust many contracts for inflation

allow comparisons of currency from different years

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The CPI is a statistical estimate constructed using the prices of a sample

of representative items whose prices are collected periodically. Sub-

indexes are computed for different categories of goods and services,

being combined to produce the overall index with weights reflecting theirshares in the total of the consumer expenditures covered by the index.

The annual percentage change in a CPI is used as a measure ofinflation.

A CPI can be used to index (i.e., adjust for the effect of inflation) the real

value of wages, salaries, pensions, for regulating prices and for deflating

monetary magnitudes to show changes in real values.

The four consumer price indices are: CPI-IW for industrial workers, CPI-

UNME for non-manual employees, CPI for agricultural laborers and CPI for

rural laborers.

Linked all- India CPI (UNME) on base 1984-85=100 for April-2010

Group

UNM

E

weigh

t

Linked

index for

April

-2010

Index for

April

-2009

%

chang

eI Food, beverages, tobacco 47.13 691 602 14.8

II Fuel and light 5.48 655 625 4.8

III. Housing 16.41 775 582 33.2

IV. Cloth., bedding and

footwear 7.03

494

471

4.9

V. Miscellaneous 23.95 599 568 5.5General Index ( all

groups)

100.0

0

667

583

14.4

CPI-IW used for wage indexation in Government and in the organized

sectors (2001 as base year).CPI UNME series is published by the Central

Statistical Organization, the others are published by the Department of

Labour.

WPI:

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The wholesale price index (WPI) is calculated based on the wholesale

price of a few relevant commodities of over 2,400 commodities available.

The commodities chosen for the calculation are based on their importance

in the region and the point of time the WPI is employed. Like CPI, WPI is ameasure of cost of a given basket of goods. WPI is an economy-wide index

covering 676 commodities. Weights of the commodities are derivedbased

on the value of quantities traded in the domestic market .It is, therefore,

the most comprehensive measure of economy-wide inflation available

with high frequency.CPI measures prices at retail level, WPI is constructed

at wholesale level. WPI measures average level of prices of goods sold by

producers.WPI is useful because it gives us an idea of what will happen to

consumer prices in the near future.it signals changes in CPI/general price

level. If producers receive higher prices from sale to wholesalers, then

retailers will charge higher prices, which will reflect in CPI.WPI is released

on weekly basis. In India, we use WPI as our official measure of inflation.

India constituted the last WPI series of commodities in 2004-05.

How to Calculate:

Laspeyres Formula (relative method)

It is the weighted arithmetic mean based on the fixed value-based

weights for the base period.

Ten-Day Price Index

Under this method, sample prices with high intra-month fluctuations are

taken and surveyed every ten days. Utilizing the data retrieved by this

procedure and with the assumption that other non-surveyed "sample

prices" remain unchanged, a "ten-day price index" is compiled and

released.

Calculation Method

Monthly price indexes are compiled by calculating the simple arithmetic

mean of three ten-day sample prices in the month.

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Description

Weights

1981-

82

1993-

94

2004-

05

I. Primary Articles 32.30 22.02 20.1

II. Fuel, Power,

Light & Lubricant 10.66 14.23 14.9

III. Manufactured

Products 57.04 63.75 64.9

All Commodities 100 100 100

Comparison

Comparison between CPI & WPI:

Publish Timing: CPI takes time to get published (monthly). But, WPI

is released on weekly basis.

Transparency: WPI data is more transparent compared to CPI data

CPI for all commodities taken together is not available! Non-

transparency has encouraged mistrust of CPI.

Effectiveness: CPI measures increase in price that a consumer will

ultimately have to pay for. But WPI not.

Many commodities included in WPI have ceased to be important

from consumption point of view.

Weightage Difference: In WPI, fuel group gets a much higher

weightage and services not included. In CPI, food gets maximum

weightage.

Coverage: WPI differs from CPI in coverage - e.g. WPI includes raw

materials and semi-finished goods.

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The Divergent behaviour of WPI & CPI:

The difference in behaviour of to inflation measures is due to the variation

in prices of various groups of articles and their weight indices. As shown

above, sharply different trend in both measures is due to volatility in food

and fuel prices and due to their different weights. In CPI weight of food

particles is more so due to rise in price of food particles, the CPI index

rises. But in case of WPI, the major portion is fuel and energy so the price

of fuel and energy went down during recession and the WPI index went

down.

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4. Causes of inflation

Demand-Pull [1]

An increase in the aggregate demand of an economy when there is full

employment of resources and when the short-run aggregate supply curve

is inelastic leads to excess demand or an output gap and can be referred

to as demand pull inflation. This is often the cause of inflation in growing

economies like India where expansions in the government and private

sector lead to increased incomes and therefore increased purchasing

power of the people.

The most common causes for demand-pull inflation are as follows:

1. Increases in the money supply - Monetarist economists believe

that the root causes of inflation are monetary especially when there

is an excessive growth of the supply of money in circulation beyond

that needed to finance the volume of transactions produced in the

economy

2. Direct or indirect decreases in taxes - If direct taxes are

reduced consumers have more real disposable income causing

demand to rise.

3. Increases in government spending Increase in government

spending will lead to an increase in income which will lead to an

increase in aggregate demand.

4. Depreciation of the exchange rate - the effect of increasing the

price of imports and reduces the foreign price of UK exports. If

consumers buy fewer imports, while foreigners buy more exports,

AD will rise.

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When the supply side cannot grow at a similar rate, scarcity of goods will

occur and a supply-demand mismatch will lead to a price increase.

[1]

Cost Push Inflation [2]

Cost-push inflation occurs when businesses respond to rising production

costs, by raising prices in order to maintain their profit margins. Higher

costs may be due to:

1. Higher cost of raw materials Imported goods may be costlier

because of inflation in other countries. Scarcity of resources also

leads to higher price of raw materials.

2. Rising labour costs As the wage rates rise, cost of production

rises as well

3. Increase in direct or indirect taxes - . These taxes are levied on

producers (suppliers) who, depending on the price elasticity of

demand and supply for their products, can opt to pass on the

burden of the tax onto consumers.

India has faced supply-side inflation with respect to the agricultural sector

in recent times which has propelled food inflation into double digits.

During April to March 2010-11 food prices went up 11.24 per cent and fuel

prices 12.27 per cent over the previous financial year. [3] The ineffective

public distribution system as well as the rising fuel prices and declining

agricultural productivity have led to food supply shocks.

In addition, rising international commodity prices seem to be instrumental

in driving domestic inflation in the long run. [4]

Expectations

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Sustained high levels of inflation have given way to rising inflation

expectations. According to the RBIs recent survey on inflation

expectations, urban households in India do not expect any immediate

respite from price rise and a majority of them feel it would accelerate inthe coming quarters. According to this survey, inflation is likely to

accelerate to 13.1 per cent by the end of this year. This means, going

forward, there will be stronger demand for wages hikes in the organised

sector, with its spillover effect on generalised inflation. [3]

[2] < http://blog.apnapaisa.com/tag/demand-pull-inflation / >[3] [4] What Drives Inflation in India: Overheating or Input Costs?(Hatekar, Sharma,

Kulkarni)

Fiscal Deficit

High fiscal deficit means that that the government has incurred a large

debt. In order to finance this debt, the government borrows money from

the RBI. This is known as monetization of debt and leads to an increase in

money supply. This in turn leads to demand-pull inflation.

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http://www.business-standard.com/india/news/isindian-economy-overheating/432776/http://www.business-standard.com/india/news/isindian-economy-overheating/432776/http://www.business-standard.com/india/news/isindian-economy-overheating/432776/http://www.business-standard.com/india/news/isindian-economy-overheating/432776/


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1. Inflationary Trends in India

Looking at inflation data3 at the disaggregated level throws up an

interesting trend. For most part of the year 2010, it was the Primary

Articles segment which contributed substantially to overall inflation.

Further, within the Primary Articles segment, it was Food Articles where

inflation was at an uncomfortably high level throughout 2010. However,

beginning 2011, we see that the contribution of the other two broad

segments, namely Fuel & Power and Manufactured Goods, to overall

inflation

has gone up swiftly while that of Primary Articles has come down. It is

however important to note that while inflation in case of Food Articles

may be trending down, it is still high for any comfort. Further, while

inflationary pressures seen in case Fuel and Power can be attributed to

the increase in prices of items like petrol and coal, the buildup of

inflationary pressure in manufactured goods is largely the result of rising

prices of raw materials and industrial inputs and which are being passed

on by manufacturers in the final prices of their products.

Let us now look at the phase wise inflationary trends4 in India over the

past 18 months

3 Current State of IndianEconomy , June 2011

4 Speech by Mr Deepak Mohanty , Executive Director of the Reserve Bank of India, atthe Indian Institute of Technology (IIT), Guwahati, 3 September 2011

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This phase was marked by slowing down of price pressu

There was a slowdown in overall IIP growth

The trend of moderating inflation and consolidating gro

Bank

Liquidity continued to remain in deficit , rates in all the

The moderately declining trend in inflati

Spurt in food inflation as unseasonal rain

Stronger than expected pass-through o

High global commodity prices and their l

persist

Evidence of demand pressure from incre

P hase- wise trend of inflation from October ,09 to present

Phase I October 2009March 2010 Phase II

AprilJuly 2010

Phase III AugustNovember 2010 Phase IV December

2010 onwards

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er cent in October 2009 to above 10 per cent by March 2010

200910, which adversely affected the food prices

this period. Manufactured non-food products inflation also reverted to its medium-term trend

this phase

be increased to bring them to the pre crisis level

Year-on-year WPI inflation remained stubborn around 10 per cent and the index advanced by 3.

High Food prices especially from protein rich food(supply side constraint) and rising petroleum

While the level of inflation had increased, industrial production was showing a declining trend

Weak US recovery and concerns over sovereign debt sustainability in euro area during this peri

Policy rates were raised thrice and the CRR was raised once


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1. Policies to Control Inflation:

An important point to consider is that inflation comes from more than one

source. Rising prices are not simply the result of increasing aggregatedemand but also of higher costs of production and the direct and indirect

effects of changes in government policies. It is also important to note that

many inflationary impulses come from outside the domestic economy -

namely from external shocks in the global economic system - many of

which an individual country has no control to change.

Thinking about the domestic economy, inflation can be reduced by

policies that

1. slow down the growth of aggregate demand (AD) or

2. boost the rate of growth of aggregate supply (AS)

The main anti-inflation controls available to a government are:

Fiscal policy:

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If the government believes that aggregate demand is too high, it may

choose to tighten fiscal policy by reducing its own spending on public

and merit goods or welfare payments. Or it can choose to raise direct

taxes, leading to a reduction in real disposable income. These fiscalpolicies increase the rate of leakages from the circular flow and reduce

injections into the circular flow of income and will reduce demand pull

inflation.

The consequence may be that demand and output are lower which has an

effect on jobs and real economic growth in the short-term. A fiscal

tightening will have the effect of reducing the size of the budget deficit.

Hence it is not a preferred measure to combat inflation.

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Supply side economic policies and government initiatives:

Supply side policies include those that seek to increase productivity,

competition and innovation all of which can maintain lower prices. These

are important ways of controlling inflation in the medium term. If the

economy can raise its underlying growth rate, then a higher level of

aggregate demand can be sustained without leading to acceleration in the

rate of inflation.

A very effective way to reduce the cost push inflation is also by direct

intervention by government or prices and incomes' policy. This is when

government takes measures to restrict the increase in wages (incomes)

and prices.

There are two types of direct intervention:

Statutory - government freezes wages and prices; and

Voluntary - government tries through argument and persuasion to

make firms adopt smaller prices and wages.

The problems with direct intervention are:

The confrontation with trade unions and employers.

Also because the prices are much more easily controlled in public

sector, it tends to discriminate in favour of private sector.

It also distorts market forces, since expanding sectors can't find any

new workers, because of the low price, whereas declining sectors

hold on to theirs.

This policy also tends not to take account the differentials, usually

flat base policy is used (e.g. every worker can get a pay rise of Rs.4

a week), which is unfair to people earning higher salaries as their

percentage pay rise is much smaller.

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Direct intervention policy is more effective in short-term, but it stores up

trouble for the future, because prices tend to rise rapidly as soon as the

policy is abandoned.

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Monetary policy:

A tightening of monetary policy involves the central bank taking a series

of measures to reduce consumer and investment spending. Monetary

policy is designed mainly to control demand-pull inflationary pressures.

The primary measures followed by the central bank are as follows:

Bank Rate Policy: Increase rate at which RBI lends to other banks

(repo rate) and hence the rate at which banks lend to the

customers.

Open Market Operations: Sell government securities and price

bonds in open market to reduce money supply in the market.

Variable Reserve Ratio: Increase the CRR and SLR Ratios

Demonetization of Currency: To reduce black money

Issue of New Currency: Most extreme step

However the most common mechanism used is the interest rate. It is both

the most effective and the most convenient measure to control inflation

so far.

Monetary policy thus can control the growth of demand through an

increase in interest rates and a contraction in the real money supply.

The effects of higher interest rates are as follows.

Higher interest rates reduce aggregate demand in three main ways;

Discouraging borrowing by both households and companies

Increasing the rate of saving (the opportunity cost of spending

has increased)

The rise in mortgage interest payments will reduce homeowners'

real 'effective' disposable income and their ability to spend.

Increased mortgage costs will also reduce market demand in the

housing market

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Business investment may also fall, as the cost of borrowing funds will

increase. Some planned investment projects will now become unprofitable

and, as a result, aggregate demand will fall.

Higher interest rates could also be used to limit monetary inflation. Arise in real interest rates should reduce the demand for lending and

therefore reduce the growth of broad money.

Indirectly, high interest rates lead to reduced business borrowings, thus

causing reduction in output. This leads to reduced income and hence

reduced demand.

The most appropriate way to control inflation in the short term is for the

government and the central bank to operate fiscal and monetary policy to

keep control of aggregate demand to a level consistent with our

productive capacity.

The standard consensus among economists (until recently) has been that

aggregate demand is probably better controlled through the use of

monetary policy rather than an over-reliance on using fiscal policy as an

instrument of demand-management. But in the long run, it is the growth

of a countrys supply-side productive potential that gives an economy the

flexibility to grow without suffering from acceleration in cost and price

inflation.

Governments response to inflation in India

Governments main response to the question of inflation has been to try and

manage it through monetary measures. As a result, it has hiked rates 13 times in

the last 19 months! This is reflected in the fact that the RBI increased all keyrates (like Cash Reserve ratio, repo rate etc) in the economy which was followed

by the banks raising the interest rates for home loans and other loans. This is

done with the basic assumption that with an increase in the interest rate, the

demand in the economy will decrease and this will lead to a reduction in the

inflation rate.

Recent Policy Measures

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Monetary policy measures: The most recent changes were made during RBI's

Q2 review of monetary policy FY12 on October 25, 20111

1. Interest rate hikes: Repo rate hiked to 8.5% and reverse repo rate hikes to

7.5%. The RBI has also revised down its growth forecast for the fiscal year

ending in March to 7.6% from 8% with a downside bias earlier, while sticking

with its forecast that headline wholesale price index inflation will ease to 7% at

the end of the fiscal year.

2. Deregulation of savings bank interest rates with immediate effect: It

has also deregulated savings bank interest rates with immediate effect. Savings

bank account rate will be linked with the policy rate at which the central bank

lends short-term funds to commercial banks

Non Monetary Policy measures2:

1. Reduction of import duties on wheat, rice and pulses, a ban on the export

of non-basmati rice and the suspension of futures trading in rice, urad and

tur dal.

2. The government has extended the stock limit orders for pulses, paddy and

rice and reduced import duty on skimmed milk powder, among other

measures.

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Impact of the Monetary Policy3,4:

The monetary tightening effected so far by the Reserve Bank has helped in containing

inflation and anchoring inflationary expectations, though both remain at levels beyond

the Reserve Bank's comfort zone. Infract, India's food inflation rate fell significantly to 6.6

per cent for the week ended November 26, 2011

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Shortcomings of the policy5:

Cannot simultaneously simulate economic demand to reduce

unemployment and restrain demand to combat inflation

It is restricted by fiscal policy and other regulatory policies

Limited by supply side factors: Inadequate storage capacity to

store grains and agriculture produce

Transportation Measures needed to be addressed

Additional expenditure needed on part of the Government to check

rampant increase in food prices

Problems of inflexible labor market and inadequate infrastructure also

limit the effectiveness of monetary policy

This over reliance of the Government on the monetary instruments to resolve

every problem of the economy cannot work in long run. What is needed to tackle

the problems of the Indian economy is fiscal prudence coupled with increase in

purchasing power of the poor by increasing Government expenditure particularly

in the rural areas. The answer therefore lies in the struggle for an alternative set

of development policies.

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1. Why is inflation a necessary evil?

Ask any investment banker, policy maker, economist or any government,

about inflation, and you can see the expression of the face turning from

docile to a -hostile one. Such is the effect of the word inflation itself. But

as economists and realists we need to delve into the fact that if we want

our economy to grow, we have to take in count that inflation will poke his

head to haunt us and as opportunists we need to find out how we can use

inflation to our maximum benefit and is inflation itself bad for the

economy or is it a necessary evil.

Some of the benefits of inflation are

1. Money Creation We know that the government issues and

sells bonds, and spends the proceeds to account for government

spending and does not typically create money, but if the bonds

are bought by the central bank, which then creates or injects

money into the system to pay for them, the result is the same.

This revenue from money creation allow the government to

borrow less from public or to lower the taxes. But this advantage

is more relevant to countries with very high inflation rates.

2. More flexibility to fight recession - An economy with a higher

average inflation rate has more scope to use monetary policy to

fight recession as against an economy with a low average inflation

rate as the one with the low inflation rate may find itself unable to

use monetary policy to return output to the natural level of output

in case of recessionary times. Eg- United States, has low inflation

and low nominal interest rates and after the recession set in 2008,

the room for monetary policy to help avoid a decline in output was

clearly limited.

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3. Business Growth Controlled growth of inflation can be a boon

for us as when there is controlled inflation, people spend their

money on buying goods and services since they are afraid of

rising prices in the future and thus savings are frequently investedto avoid net loss when housed in banks leading to more output in

the market.

4. Avoid deflationary environment Lowering inflation has more

adverse effects as if inflation stoops down to deflationary levels, it

causes severe disadvantages of lower spending as there would be

an incentive to hold on to purchases when prices are falling,

liquidity trap as even lowering interest rates would be ineffective

in increasing demand, debt becomes an increasing burden

reducing spending and economic growth. So some amount of

inflation is absolutely necessary to keep the economy afloat.

Optimal inflation Rate

The debate in the OECD countries is largely between the rates of at least,

say 3-4% and the rate of 0% inflation. How much inflation is healthy for

the economy is the real question and depends on what kind of economy

we are.

Those who agree with the 4% minimum inflation rate give the reason as

the cost of inflation are comparatively small as against the benefits of

inflation and say some of the costs of inflation like shoe-leather costs,

inflation variability etc could be avoided by indexing the tax system and

issuing more indexed bonds or using inflation indexed bonds. Also

lowering inflation rate may result in unemployment in the short run which

in turn can lead to lowering down the benefits of lowering it down in the

first place.

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Economists in favor of price stability, aim for 0% inflation rate as the

prices would remain more or less the same over the year which eliminates

the scope for money illusion and money market volatility. But generally,

central banks worldwide are in the favor of low but positive inflationdepending on the type of economic development and the rates would lie

between 2% - 5% in different economies.

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1. Lessons learnt and the way ahead :

Some of the lessons learnt in our study are

1. The extent to which food price inflation affects consumer welfare

depends on the degree of price transmission. The degree of

transmission of world market prices to domestic prices is at the heart

of national food security policies and is cause of concern for us.

2. Price controls alone have not been not very effective at limiting food

price inflation as price controls negatively affect supply by creating

perverse incentives to producers.

3. Liberal trade policies benefit consumers as efforts to curtail food

exports rarely succeed, and they generate significant negative

externalities.

4. Public grain reserves have played an important role in dealing with the

food. Crisis as some observers have called for collective action on

stocks, whereby individual countries would set aside some of their

grain reserves as part of a new international coordinated global food

reserve managed by a highlevel committee.

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REFERENCES:

Policies to Control Inflation, Geoff Riley,

(http://tutor2u.net/blog/index.php/economics/comments/as-macro-

revision-policies-to-control-inflation/)

Economic policies to Control Inflation

http://tutor2u.net/economics/content/topics/inflation/controlling_inflatio

n.htm

How to Control inflation, Business Standard, 2 April 2008

Deepak Mohanty: Monetary policy response to recent inflation in India

Inflation and relative prices (article by Mihir Rikshit)

http://rbi.org.in/scripts/bs_viewcontent.aspx?Id=2430

http://articles.economictimes.indiatimes.com/2011-08-

18/news/29900601_1_food-inflation-annual-basis-rate-of-price-rise:

http://indusfinance.com/2011/06/17/impact-of-rbi-policy-rates-on-

inflation-a-critical-review/

http://businesstoday.intoday.in/story/loans-to-get-costlier-as-rbi-hikes-

key-rates-yet-again/1/18734.html

http://www.slideshare.net/CMVerma/rbi-monetary-policy

30 | P a g e
http://tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation/http://tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation/http://tutor2u.net/economics/content/topics/inflation/controlling_inflation.htmhttp://tutor2u.net/economics/content/topics/inflation/controlling_inflation.htmhttp://rbi.org.in/scripts/bs_viewcontent.aspx?Id=2430http://articles.economictimes.indiatimes.com/2011-08-18/news/29900601_1_food-inflation-annual-basis-rate-of-price-risehttp://articles.economictimes.indiatimes.com/2011-08-18/news/29900601_1_food-inflation-annual-basis-rate-of-price-risehttp://indusfinance.com/2011/06/17/impact-of-rbi-policy-rates-on-inflation-a-critical-review/http://indusfinance.com/2011/06/17/impact-of-rbi-policy-rates-on-inflation-a-critical-review/http://businesstoday.intoday.in/story/loans-to-get-costlier-as-rbi-hikes-key-rates-yet-again/1/18734.html%20%0D5http://businesstoday.intoday.in/story/loans-to-get-costlier-as-rbi-hikes-key-rates-yet-again/1/18734.html%20%0D5http://www.slideshare.net/CMVerma/rbi-monetary-policyhttp://tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation/http://tutor2u.net/blog/index.php/economics/comments/as-macro-revision-policies-to-control-inflation/http://tutor2u.net/economics/content/topics/inflation/controlling_inflation.htmhttp://tutor2u.net/economics/content/topics/inflation/controlling_inflation.htmhttp://rbi.org.in/scripts/bs_viewcontent.aspx?Id=2430http://articles.economictimes.indiatimes.com/2011-08-18/news/29900601_1_food-inflation-annual-basis-rate-of-price-risehttp://articles.economictimes.indiatimes.com/2011-08-18/news/29900601_1_food-inflation-annual-basis-rate-of-price-risehttp://indusfinance.com/2011/06/17/impact-of-rbi-policy-rates-on-inflation-a-critical-review/http://indusfinance.com/2011/06/17/impact-of-rbi-policy-rates-on-inflation-a-critical-review/http://businesstoday.intoday.in/story/loans-to-get-costlier-as-rbi-hikes-key-rates-yet-again/1/18734.html%20%0D5http://businesstoday.intoday.in/story/loans-to-get-costlier-as-rbi-hikes-key-rates-yet-again/1/18734.html%20%0D5http://www.slideshare.net/CMVerma/rbi-monetary-policy

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