3. About the presentation
Focus :-
• Study focus on RBI credit policy during decades 2009-11.
• It also focus on variables in Inflation Rate.
• It also focus on effects on Policy in Inflation as well as on economy.
Introduction to Inflation
Introduction to RBI
Objectives of the study
Hypothesis
Methodology of the study
Inflation,Monetary and credit policies
Data analysis and interpretation
Scope of the study
Conclusions
Suggestions
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4. Objectives of the study
The study is focuses on the term of inflation, what is inflation, its meaning,
causes, direct or indirect effects on economy, how it will control?
To understand the credit policy and the monetary terms for controlling the
inflation as well as money flow into the market.
To examine the effects on the banking sector or the RBI credit policy for
control of money flow into the market.
To study the fundamental factors affecting the monetary value.
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5. To examine the factors of inflation,including effect on GDP,
inflation rate etc.
To learn about the monetary concept in inflation and their
instruments as control measures.
To make sure the positive as well as negative effects of inflation on
RBI credit policy.
To review the economy performance in the current financial year
and estimate the economy prospects for the coming year.
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6. Hypothesis
Hypothesis
Inflation is always good for the economy but over inflation affects
the economy.
The credit policies are designed with the aim of controlling the
money supply and balance the position of the economy.
Inflation is related to economical development of the nation.
To control the inflation RBI always try to get it controlled through
the credit policies but it could be controlled by other factors also.
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7. Methodology of the study
This study is totally based on secondary data.
The sources of data are various economic surveys of India
and RBI bulletin, online database of Indian Economy,
Journals, articles, news papers and various books based on
Indian Banking sectors.
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8. Introduction to Inflation
Inflation is a rise in the general level of prices of goods and
services in an economy over a period of time.
Inflation's effects on an economy are various and can be
simultaneously positive and negative.
Most economists today use the term "inflation" to refer to a rise in
the price level.
Inflation is largely dependent on supply and demand pressures in
the economy.
Most economists today use the term "inflation" to refer to a rise in
the price level
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9. Causes of inflation
Inflation comes in different forms and those at are familiar with
the economic matters would observe that there are trends in the
way that prices are moving gradual and irregular in relation to
aggregate sections of the economy.
The main causes of inflation are:
Demand-pull Inflation
Cost push Inflation
Monetary inflation
Structural inflation
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10. Effects of inflation
Inflation can have positive and negative effects on an economy
Positive effects:
Mitigation of economic recessions
Debt relief by reducing the real level of debt.
Negative effects:
Distortion of relative prices
Increased risk - Higher uncertainties
Existing creditors will be hurt
Lowers national saving
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11. Introduction to RBI
The Reserve Bank of India was established on
1 April 1935 in acordance with provisions of Reserve
Bank of India Act, 1934. Bank of India Act, 1934.
The central office of Reserve Bank was initially
established in Kolkata but was permanently moved
to Mumbai in 1937.
The central office is where the Governer sits and
where policies are formulated.
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12. Monetary & Credit policy
Monetary policy is, by common agreement, the defining function of a
central bank.
The Monetary and Credit Policy is the policy statement, traditionally
announced twice a year, through which the Reserve Bank of India seeks
to ensure price stability for the economy.
Monetary policy, which is usually understood to represent policies,
objectives, and instruments directed towards regulating money supply
and the cost and availability of credit in the economy.
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13. Data Analysis and interpretation
Money Supply (M3)
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20
15
10 Money Supply (M3)
5
0
2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
est est est
As per the above graph it is showing the updates of money supply (M3) in the
market. As mention in the year 2005/06 the money supply is calculated at
21.2% which is increases in next year at 21.5% and the % of money supply is
decreases in the year of 2007/08 at 21.2 after that it is calculated 13.3 % in
2009/10. And it is expected to be high money supply % in 2010/11 at 19.1 %.
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14. GDP Growth Rate
Real GDP (at factor cost, % change)
10
9
8
7
6
5 Real GDP (at factor cost, %
4 change)
3
2
1
0
2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
est est est
As per the Indian economy update year 2010 the above graph is showing about the GDP %
change from 2007 to 10. In between 2007/08 to 2009.10 it is estimated to 8% & in 2007/08
the GDP is indicated at 9.2 % suddenly in 2008/09 it decreases at 6.7%. And the GDP is
estimated to be 8.5 to 8% in the year of 2011 to 2013.
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15. Sectoral Deployment of personal
loan housing
Personal loan housing
14
12
10
8
6
Personal loan housing
4
2
0
-2 8-Feb 9-Feb 8-Feb 9-Feb 8-Feb 9-Feb
-4 Public sector bank Private sector bank Foreign bank
-6
As above graph is showing the significant variations in flow of credit to personal loan
housing sectors by the three broad bank groups during 2008-09. credit growth to personal
loans and services decelerated.
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16. Sectoral Deployment of Small
enterprises
250
200
150
100 Small enterprises
50
0
Public sector Private Foreign
bank sector bank bank
As per the above graph in 2008 the credit ratio is decelerated from 49 to 36 %, by private
sec bank it is decelerated at 23.2% , by foreign sec bank it is decelerated at 59%. All over
we can say that the credit by all sector bank is decelerated to small enterprise.
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17. Scope of the study
It can help in to find out the causes behind inflation which shows the
increasing or decreasing variables in inflation rate.
It can also help in to find the control measures for inflation,to control its
variable effects on economy.
It also examines the positive as well as negative effects of inflation.
To review the direct or indirect effects of inflation on economy as well as in
monetary and credit policy of RBI.
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18. Conclusions
Inflation if well controlled at certain level then it could be better for the economy
When demand increases and supply decreases then inflation increases.
So industry should have a balance production so that demand and supply is equal
and inflation decreases
Inflation remained the major concern during 20011-12 due to upsurge in global
commodity price and crude oil through wholesale price index.
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19. Suggestions
RBI should take proper steps to control Inflation if it seems to come at certain
level in economy
Monetary Policies should be framed by RBI by analyzing economic condition in
the country’s economy.
Government should maintained balanced in sectoral development by providing
proper circulation of fund.
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20. Courtesy
Web sites:
www.moneycontrol.com
www.metacafe.com
www.google.com
www.rbi.org.in
Hindustan Times
The Times Of India
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