Inflation & GDP Movement in India

What causes inflation?

Rising commodity prices are perhaps the most visible inflationary force . Higher oil prices. Exchange rate movements can presage inflation. Currencies of countries with higher inflation rates tend to depreciate relative to those with lower rate

Effects of Inflation
This acts as a principal component of the rates of interest, which forms the basis of all TVM calculations.

Inflation exerts impact on the treasury of a nation as well.

The most immediate effect of inflation is the decrease in the purchasing power of dollar and its depreciation. Inflation changes the allocation of income. Inflation leads to a handful of the consumers in making extensive speculation, to derive advantage of the high price levels.

Inflation in India
The inflation rate in India was last reported at 10.1 percent in October of 2011. From 1969 until 2010, the average inflation rate in India was 7.99 percent reaching an historical high of 34.68 percent in September of 1974 and a record low of -11.31 percent in May of 1976.

Current trend of inflation in India

Gross Domestic Product(GDP)

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

GDP in India
India Gross Domestic Product is worth 1729 billion dollars or 2.79% of the world economy. Historically, from 1960 until 2010, India's average Gross Domestic Product was 339.84 billion dollars reaching an historical high of 1729.01 billion dollars in December of 2010 India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points

Current trend of GDP in India

GDP and Inflation Movement till 2012