Monday, November 18, 2019

Analysis of Salient Macroeconomic Parameters of India Assignment

Analysis of Salient Macroeconomic Parameters of India - Assignment Example In PPP terms, it is quite evident from the above figures that the economy of India is growing at the average rate of 9 percent, which is certainly a good feat in the wake of liberalization and globalization process undertaken during the 1990s. The inflation rate has been growing steadily since the year 2005. Rapid economic growth in India has brought the perils of high inflation rate which was estimated at 10.9 and 12 percent in the year 2009 and 2010 respectively; however, in the year 2011 due to appropriate monetary policy by the Central Bank, it has reduced to 6.8 percent. The high inflation rate in India is causing great inconvenience to the people. (Inflation rate 2011) As per the report released by the Labor Ministry in October 2011, the unemployment rate in India was estimated at 9.4 percent during the fiscal 2010-11 which is certainly a matter of great concern. The government was confident of creating 58 million additional jobs by the end of 11the five-year-plan in 2012. Though India has been agrarian economy until the turn of this century in last one decade things have changed drastically as a contribution from services in the country's GDP has reached to almost 59 percent by the year 2010. (The government 2012) In its report of May 3, 2011, the Reserve Bank (Central Bank) specified that the Global economy was in an uncertain state. Inflation was the nagging issue on the domestic front due to high food prices. The policy document clearly specified that the goal of monetary policy was to nail the supply-side inflation. High inflation causes investment uncertainty. The policy document spelt out the necessity to bring down the inflation even at the cost of growth. Accordingly, Central Bank revised the interest rates upwards and raised the repo rates. Even CRR was often revised to take the excess money out of the market. That really helped to cool down the economy and brought the inflation rate at a moderate level. Thus, Central Bank keeps a strong vigil to control inflation and unemployment rate through its effective monetary measures. (Monetary Policy Statement, 2011)

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