2. Reasons for current
inflationary situation in
India & measures by RBI
- DEBANSHU GHOSH
13DM013
- PRITAM SAHOO
13DM050

3. CAUSES OF INFLATION
A.
•
•
•
•
B.
•
•
•
•
Factors causing increase in demand for goods & services :
Increase in money supply
Increase in governmental & private expenditure
Decrease in tax rates
High growth rate of population
Factors causing decrease in supply of goods & services :
Scarcity of factor & non- factor inputs
Strikes & lockouts in business firms
Increase in exports
Illegal activities like black marketing & hoarding

4. CURRENT INFLATION RATE
In October of 2013, India’s annual headline inflation rose for the fifth
straight month to an eight-month high of 7 percent, mainly due to
higher prices of fuel and manufactured goods.

5.  The index for food prices eased to an annual 18.19% slower
than the annual rise of 18.4% in September. On a monthly
basis, it declined 0.4 percent due to lower prices of ragi and
maize (5% each), tea (4%) and poultry chicken, fruits and
vegetables and fish-marine (3% each).
 Energy costs were up 10.33% year-on-year, slightly up from
10% in the previous month. On a monthly basis, it increased
0.9%.
 Prices of manufactured goods accelerated to 2.5%, up from 2%
in September. From September to October, it went up 0.4%.
Build up inflation rate in the financial year so far was 6%
compared to a build up rate of 4.66% in the corresponding
period of the previous year.

6. CURRENT INFLATION RATE
IN INDIA
CPI INFLATION INDIA
NOVEMBER 2013 : 11.24%

8. CHART – CURRENT CPI
INFLATION INDIA ( Yearly basis )
– Last 12 Months
The CPI inflation rates in the table are presented both on a monthly basis, compared
to the month before, as well as on a yearly basis, compared to the same month last
year.

9. Inflation (monthly basis)
inflation
Inflation (yearly basis)
inflation
october 2013 - september 2013
1.26 %
october 2013 - october 2012
11.06 %
september 2013 - august 2013
0.42 %
september 2013 - september
2012
10.70 %
august 2013 - july 2013
0.85 %
august 2013 - august 2012
10.75 %
july 2013 - june 2013
june 2013 - may 2013
may 2013 - april 2013
april 2013 - march 2013
1.73 %
1.32 %
0.88 %
0.89 %
july 2013 - july 2012
june 2013 - june 2012
may 2013 - may 2012
april 2013 - april 2012
10.85 %
11.06 %
10.68 %
10.24 %
march 2013 - february 2013
0.45 %
march 2013 - march 2012
11.44 %
february 2013 - january 2013
0.90 %
january 2013 - december 2012
0.91 %
december 2012 - november
2012
0.46 %
november 2012 - october 2012
0.46 %
february 2013 - february 2012 12.06 %
january 2013 - january 2012
december 2012 - december
2011
november 2012 - november
2011
11.62 %
11.17 %
9.55 %

10. RUPEE SLIDE

11. HOW IS INFLATION
MEASURED?
Inflation is measured by a statistical tool known as index number.
In India, there are 5 major national indices for measuring
changes in the price levels - WPI (1) & CPIs (4)
i. WPI ( Whole Sale Price Index)
ii. CPI (Consumer Price Index)
iii. GDP Deflator

14. GENERAL MEASURES BY RBI
RBI measures inflation by Monetary policy.
Policy through which the central govt. & The central bank
of the country regulate the money supply in the economy
with a view to ‘correct inflationary or deflationary
situation’ in the economy & have monetary stability.
‘Monetary Policy’ is implemented through the use of
‘Monetary Instruments’ :i.
ii.
iii.
iv.
Bank Rate Policy (BRP)
Variable Cash Reserve Ratio (CRR)
Open Market Operations (OMO)
Statutory Liquidity Ratio (SLR)

15. CURRENT MEASURES
TAKEN BY RBI
 Facing some of the fiercest price pressures
in Asia, the RBI lifted its policy repo rate
by 25 basis points (bps) to 7.75 percent, in
line with expectations in a Reuters poll.
 With the rupee having stabilised after a
steep May-August slide, the RBI also
lowered its Marginal Standing Facility
(MSF) rate by a further 25 bps to 8.75
percent, as expected, which eases liquidity
in the banking system by lowering the cost
of borrowing for lenders.

16. CURRENT RATES
Bank Rate (BRP) : 8.75% (w.e.f. 29/10/2013)
Decreased from 9.00% which was continuing since 07/10/2013
Cash Reserve Ratio (CRR) : 4.00% (w.e.f. 09/02/2013)
Announced on 29/01/2013 - Decreased from 4.25% which was
continuing since 30/10/2012
Statutory Liquidity Ratio (SLR) : 23% (w.e.f. 11/08/2012)
Announced on 31/07/2012 - Decreased from 24% which was continuing
since 18/12/2010

17. Repo Rate under LAF : 7.75% (w.e.f. 29/10/2013)
Increased from 7.50% which was continuing since 20/09/2013
Reverse Repo Rate under LAF : 6.75% (w.e.f. 29/10/2013)
Increased from 6.50% which was continuing since 20/09/2013
Marginal Standing Facility (MSF) : 8.75% (w.e.f. 29/10/2013)
Decreased from 9.00% which was continuing since 07/10/2013

19. RECENT NEWS ABOUT OMO
 RBI has decided to purchase Rs 8000crs government bond
to keep the system adequately supplied with liquidity.
 To strengthen currency rate.

20. THANK YOU