School Of Management National Institute of Technology, Agartala

NITESH RANJAN

16msom016

Inflation

InflationIncrease in Price with respect to time can be said as inflation.The term "inflation" originally referred to increases in the amount of money in circulation. However, most economists today use the term "inflation" to refer to a rise in the price level. An increase in the money supply may be called monetary inflation, to distinguish it from rising prices, which may also for clarity be called "price inflation". Economists generally agree that in the long run, inflation is caused by increases in the money supply.

Year Inflation Rate in %1990 13.711991 13.071992 81993 8.641994 9.471995 9.691996 10.411997 6.291998 15.321999 0.472000 3.482001 5.162002 3.22003 3.722004 3.782005 5.572006 6.532007 5.512008 9.72009 14.972010 9.472011 6.492012 11.172013 9.132014 5.862015 6.322016 2.23

1985 1990 1995 2000 2005 2010 2015 20200

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Chart Title

Indian Inflation rate from 1990 – 2016Maximum IR : Year 1990

Minimum IR : Year 1999

*Note :- IR = Rate of Inflation

By the end of 1990, India was in a serious economic crisis. The government was close to default, its central bank had refused new credit and foreign exchange reserves had been reduced to such a point that India could barely finance three weeks’ worth of imports which led the Indian government to airlift national gold reserves as a pledge to the International Monetary Fund (IMF) in exchange for a loan to cover balance of payment debts.

2016 Inflation rate Analysis

Monthly inflation rate in India for year 2016

By the given data we can see that in May 2016 there was a highest inflation rate of 6.59% and in Dec 2016 there was a drastic fall with 2.23%Which is very low with comparison to last year Dec 2015.The Demonetization was one of the biggest step of Indian govt. which reduces the inflation rate.

Sources : The Statistics Portal

FindingsAccording to International Monetary Fund (IMF) the Inflation rate for India is fluctuating but going down year by year.

My Findings by comparing the data :-The Forecasting data differs from the IMF and actuals if we compare it for 2016 the IMF shows the inflation rate 5.5% but the actuals vary from this data to 2.23% if we get into it we find that the IMF was okay with its data but the policy of India changes and that affected factors of inflation.

IMF Data 2016

Actuals 2016 occurrence

5.5 % 2.23 %

Inflation Forecasting by IMF up to 2021

ForecastingAt the time of studying I found different data and information through different sources. What I found in my study is that we forecast the Inflation rate but the Govt. policy is most important factor at the time to affect market.

Indian GDP Forecasting for Future

The GDP of India at 1990 was 5.53% with the total of $375.89 USD w.r.t Inflation rate of 13.71%

The GDP of India for 2021 is forecasted by IMF will be 8.12% with the Inflation rate of 4.9%