Causes and Effects of Inflation in India

Causes and Effects of Inflation in India Introduction Inflation is defined as the constant rise in the price of a particular goods and services over a period of time. When the level of prices increases, each unit of currency can purchase lesser goods and services making the purchasing power will decrease. There are two types of inflation in this world including the positive inflation and negative inflation. A negative inflation will increase the chances of investors to hold their money as the future is still in uncertainty. They do not want to take risks of their money to invest in uncertainty and hence will lead to surplus of goods in market. A positive inflation will help the bank to adjust their real interest rate in a short run and encourage investment in the non-monetary capital project. Summary In recent years, high food inflation in India is one of the factors which bring to non-food inflation and aggregate inflation. There are 4 factors that affect food inflation occur, which are international prices and trade policy, rising demand supply mismatch, stagnant productivity and minimum support prices. During 2008 and 2010, international economist forecasted that will be inflation on that year caused that the international price of good increase. It affects the cost of input which import from foreign country has been increased as well. Besides, rising per capita income and diversification of diet in India causes that the demand of high-value product like eggs, meat fruits and other rise while the response of supply of these products is being weak. To overcome the problem of stagnant productivity, Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) is promoted and it affect that the rural wages in India rise. Under this program, the indexation of wage rate to Consum er Price Index has been pushed up the minimum wage. (Sonna, October 2014) Food inflation will cause that wage rate increase because labor can request for a higher wage since food is constituted as an important good in their consumption basket. Increase of wage will increase the cost of production and make the prices of non-food increase as well. On the same time, the real income of producer in food sector is increased during the rise in food price. It cause that the demand of non-food items will rise due to the increases of food prices which relative to aggregate price through substitution effects and through income effect of the food producer. (Sonna, October 2014) When the price of food inflates, it will drive the fluctuation in currency which has created a huge impact on all the sectors. For instance, the domestic oil price is linked with the international oil price. This lead to the oil price has a direct relationship with the Indian currency as US dollar which has already become one of the acceptable global currencies in the international market. However, the impact brought by the increase in oil price is not heavy and will cause a big burden to the market because this increase in price will go through the other sectors in the market. This contributes to share the burden of the increase in oil price among the other sectors. This causes inflation of other goods to happen due to the chain reaction happen when the prices of the domestic oil increase. (Dr.A.Hidhaya Mahammad Rafee.B, 2014) As the oil price and inflation build a cause and effect relationship, the fluctuations of oil prices have significant impact on the inflation. The impacts of oil prices fluctuations are different in oil exporting and in oil importing countries. For the oil exporting countries, the increment of oil prices constituted good news while the increment of oil prices constituted bad news for oil importing countries. For instance, China and India were known as the most consumption on the oil among the oil importing countries in the world. Anshul Sharma stated that inflation will move in the same direction with the movement of oil prices. The inflation rate increases as the crude oil increases and vice versa. Since the early of the 21st century, the prices of oil has rising heavily. This contributed to the higher inflation as the cost of production increased. The increment of cost of production led to the increment of fuel costs and then caused the decrement of supply. Jose De Gregorio et al. stated that the fluctuation of oil prices had adverse impact on the economy. (M. Anandan, S. Ramaswamy and S. Sridhar, 2013) Besides, depreciation in the currency will subsequently lead to the people to buy lesser goods with the same amount of money they hold. This case can be defines as a decrease in the purchasing power of currency. This journal has mentioned that India is considered as one of the largest market in the world that does not have any monetary policy framework to help to control the market. This is why the India always faces inflation after a financial crisis. There is no initiative taken by India to handle the inflation brought by the financial crisis which will lower down the currency of the country. People will now start to demand fewer rupees and consider investing in other country’s currency. (Zainab Mulla, 2014) There is a strong pressure on the Rupee currency which is caused by the strong demand of US dollar. This will lead to a major impact of inflation. The Rupee depreciation will make India to produce competitive goods in global market which will bring benefit for India’s exports. The exporters gain advantages as the abroad exported goods return more Rupees which are translated from dollar to Rupees. As a result, there is a relationship between Rupees depreciation and the inflation. (Deepa Divakaran.N and Dr.G.S.Gireeshkumar, 2014) According to Kamiar Mohaddes Mehdi Raissi (2014), the inflation could lower the growth by reducing the productivity and investment. Barro stated that there is a strong evidence for the negative impact of inflation on growth. Besides, the journal stated the inflation-growth relationship is highly non-linear. Besides, Khan and Senhadji stated that the inflation rate above the ‘threshold’ is negative and significant on growth whereas the inflation rate below the ‘threshold’ is positive and insignificant. Gillman and Kejak stated that the inflation and growth has surveyed by various models and resulting in generating a negative relationship between inflation and growth. De Gregorio and Gomme proved that the relationship between inflation and growth is non-linear which means the growth rate will be lower as the inflation rate increases. Based on AK and AH models, inflation play a role as tax on either physical capital or human capital. This will lead to the decrement of the growth rate. Akerlof et al. also stated the low inflation rate may have a positive relationship with output growth. This is because of low inflation causes the increment of productivity and resulting in higher growth. (Kamiar Mohaddes Mehdi Raissi, 2014) Discussion Crude oil is an input in the value added chain of most agricultural products such as machinery fuel, transport and fertilizers. The rising of crude oil price causes that the cost of production rises and the price of final product increase as well. Moreover, nowadays food products are common used in producing of biofuel energy based on environmental preoccupation. Therefore, the substitution of crude oil by food product to produce fossil fuel causes that the food product demand increases in the market. As a prove, we found the data from US Energy Information Administration and FAO which shows that the price of oil and food is positive relationship at year 2000 to 2010. When food inflation occurs, the wage rate will increases due to the productivity need to increase but supply of labour is limited in the market. By this, not only wage of labour will increase, but the income of producer in food sector also increase because of the windfall profits will raise higher than cost of production. It means that the citizen become richer and their demand of goods and services will increase as well through income effect. The increase of demand causes that it excess than supply in the market and then causes inflation occur. In order to prove that food inflation will affect nonfood inflation and aggregate inflation, there was a Forecast Error Variance Decomposition (FEVD) analysis is done and shows that variation of food inflation contributes 54% of variation of nonfood inflation and 46% variation in aggregate inflation after 1 month of the shock. After 10 month, the variation of nonfood inflation decreases to 46% while the variation of aggregate inflation increa ses to 72%. (Sonna, October 2014) Over the years, the currency rate of Rupee to US Dollar is increasing each year. In year 2000, 1 USD can exchange for 45 Rs. However, in year 2013, the exchange rate has increased that 1 USD can exchange for 58.53 Rs. This causes the Rupee to depreciate its value due to the strong demand of US Dollar by the citizens. In order to prove the statement of Deepa Divakaran N and Dr G.S.Gireeshkumar, the major impact of inflation in India is caused by the peer pressure faced by Rupee currency as there are many people who demands US Dollar rather than holding Rupee. When the currency is facing depreciation, people will tend to hold other’s countries’ currency as Rupee has no more holding value. The demand for Rupee will drop and thus drives up the inflation. Cost-push inflation will occur when people now feel reluctant to spend their Rupee on normal goods and causes supply to be surplus and push the price to increase. Therefore, a drop in the currency of Rupee will affect inflation to happen. Throughout the research, we have figured out that the purchasing power for India is increasing linearly year by year since from year 1999 until now. Starting from year 1999, the GDP (Purchasing Power Parity) is 1,805 Billion Dollar and for year 2014, it has increase to 7,277.3 Billion Dollar. This means that the purchasing power for India is getting bigger and bigger every year. As GDP grows, there will be more transaction happen daily and this will lead to an increase in the demand of Rupee. Thus, it will help to raise the exchange rate of Rupee to other country’s currencies. This will result in the increase of purchasing power of Indians’. When the nation’s GDP (Purchasing Power Parity) increases, the exchange rate of Rupee to other country’s currency will decrease and this caused the import fee to decrease as well. This causes more and more transaction will occur because the export fee is lower compared to the older time and this can help to drive up th e country’s GDP. In order to prove the statement of Zainab Mulla, when the GDP (Purchasing Power Parity) in year 1999 is still at a lower stage, the citizens can barely afford to buy breads with 60Rs. However for year 2014, the GDP (Purchasing Power Parity) increase drastically, making the purchasing power of Rupee to increase. As a result, now they can afford to buy few types of bread with 60Rs. This shows that Rupee in year 2014 has more value than year 1999 because we can buy more stuff with 60Rs over 15 years. When the purchasing power of citizens increases, they will tend to spend more money rather than keeping it because they can get more goods with the current value. This action also can help to increase the country’s GDP. On the other hand, the decrease in the price of the crude oil also becomes one of the catalysts in the economic growth in India. Crude oil as the largest internationally traded items will have an abrupt changes in economic if there are any changes in the price for the oil exporting and importing countries. This can be seen when the economic growth of India had shown a decrease sign from year 2010 to year 2013, which is decrease from 10.3% to 5.0%. This is because of the recent crude oil price has increased from 3,463Rs in year 2010 to 6,415Rs in year 2013. The increment in the price of crude oil will affect inflation to happen if the government chooses to absorb the burden by increasing the price of other petroleum products. In order to prove the statement of Gillman and Kejak, when the price of crude oil increase, the growth of the country will decrease as the petroleum-based products will have them increase in the price which causes the consumers will try to consumer less of these products. When these products have a low demand, the supply will be overloaded and then leading to the output production level of the factory drop. Hence, the whole economic growth will be stalled. Conclusion In the nutshell, there are many causes and effect that are brought by inflation. It is undeniable that inflation is not favor in the country as it brings a lot of negative effect and will drag the growth of country. However, we could not avoid inflation from happening in a country. What we can do is just try to minimize the impact bring by the inflation. One of the solutions to curb the inflation problem is by selling bonds to the non-residential investors of the country. As we know that the poverty of Indians is very serious, the residents have less money to afford the bond sold by the government. Hence, the government should make the bond available to the investors from other country which can afford it so that there is more money inflow to the country so that the government has more money to circulate the daily money flow of money. Other than that, the government should implement some policy that makes them to be less dependent to the import industry. They should encourage more export activities because they can earn more money when the exchange rate of Rupee drops. Incentives should be given in order to encourage this action. In addition to the above, the government can also control the price of oil and give subsidies for the crude oil. By controlling the price of oil, all the petroleum-based products will also have their price controlled because they do not have to share the burden of increased price of oil. This will subsequently keep the inflation rate to remain under the threshold and will not cause any major problem to the economic growth of India. Last but not least, if the entire precaution steps have been taken to handle inflation problem, we can surely minimize the impact that bring by inflation.

English: Official Language Essay

â€Å"If language is not correct, then what is said is not what is meant; if what is said is not what is meant, then what must be done remains undone; if this remains undone, morals and art will deteriorate; if justice goes astray, the people will stand about in helpless confusion. Hence there must be no arbitrariness in what is said. This matters above everything. † — Confucius All of us are created individually because we have our differences to one another. We must obtain the fact that we are not made to use same knowledge in one aspect of context. Based on our personal perspectives, we have our own ideologies and culture that we need to preserve for it was the source of our identity. Language is one of our cultural differences to one another. By way of taking our mother tongue just to obtain new knowledge of English language was not a fair solution to globalization. That is why we must have our own guts to differ the policy stating that English language should the only language spoken and written in the world. From the time of language policy conception until today, the debate between whether to use English as the only language or not continued to more sensitive issues and arguments. Many organizations and individuals who are against with this concept are making their own way to inform the public about the limitations of the policy. Despite of promulgating this policy to many schools and companies, many people are still undecided to take this action because it was not a reasonable thinking. According to Leonard Kniffel in his article, â€Å"English only is English Lonely†, â€Å"we understood in those days that English was the key to success and acceptance. Kids like us embraced into exclusion of any language or custom that made as back as if we were just off the boat† (3). The main targets of the institutions behind the promulgation of English language policy are the children for they could not render opposition to what the academe or the social law would impose to them. Children could be feed any information without asking why and how things happened. Therefore, by using children as the primary way to make English as the official language, success will come into a wide variety of situation. According to Rebecca Weber in her article â€Å"Something to Talk About†, â€Å"English-only advocates say that assimilation and mastering English are crucial to success in school, the workforce, and society. But children who can speak English on playground can’t necessarily comprehend grade-level academic content in English† (25). This statement shows that by feeding a child the orientation to speak English language is a terrible problem because even if in his or her daily activities should make him or her use the Standard English language. Therefore, problem may arise within this issue because limitation of a child’s activity because of English language will be done without any good reasoning or justification. On the other way around, according to Loreta Medina in her article entitled â€Å"English Immersion has not been proven to Raise Test Scores†, Contrary to popular wisdom, systematic evaluations show bilingual education to be superior to English-only approaches on promoting English reading. But that advantage is fairly small if it is not combined with other costly efforts to improve the school leadership and instructional approaches that go far beyond the tired refrain of the language of instruction. (2) This statement shows that English is not the solution to global problem because there are more things to discuss rather than limiting people to use only one language. By promoting this policy, people will be engaged to a dictatorial situation wherein they could not use their mother tongue, which they could more express their selves rather than using English language. As a whole, policy on using English language as the only language used in the world especially in the society of America should not be promulgated because it promotes discrimination and inequality especially to different immigrants who could not obtain English language very well. English language will always be the second language of many immigrants from other countries but it should not be the reason to deploy them because we must know that they are striving hard to learn the language even if it was already in the sense of stupidity.

Luxury and the Montblanc brand Essay

It is generally acknowledged that western consumption of luxury in the 1980s and 1990s was motivated primarily by status-seeking and appearance. This means that social status associated with a brand is an important factor in conspicuous consumption. The baby boom generation luxury consumer has a passion for self-indulgence while maintaining an iconoclastic world view, which is transforming the luxury market from its ‘ old ’ conspicuous consumption model to a totally new, individualistic type of luxury consumer one driven by new needs and desires for experiences ’ . The expression of ‘today’s luxury’ is about a celebration of personal creativity, expressiveness, intelligence, fluidity, and above all, meaning. LUXURY AND POSTMODERNISM Recent arguments have been sounded that aspects of contemporary luxury consumption have reflected the phenomenon of postmodernism. Postmodernity means very different things to many different people’. Postmodernism is essentially a western philosophy that ‘refers to a break in thinking away from the modern, functional and rational’. In terms of experiential marketing, two aspects of the postmodern discourse are most relevant: hyper-reality and image. Hyper-reality refers to ‘the blurring of distinction between the real and the unreal, in which the prefix ‘hyper’ signifies more real than real. When the real that is the environment, is no longer a given, but is reproduced by a simulated environment, it does not become unreal, but realer than real’. The example of Bollywood to illustrate the so-called ‘Disneyfication’ of reality within the context of contemporary Indian society: ‘Bollywood captures not only the imagination in the form of song, music and dance but fairy tale settings, romantic melodrama and heroic storylines immerse the viewer in ‘simulated reality’. Traditional marketing was developed in response to the industrial age, not the information, branding and communications revolution we are facing today. In a new age, with new consumers, we need to shift away from a features- and-benefits approach, as advocated by traditional approaches to consumer experiences. One such approach is experiential marketing, an approach that in contrast to the rational features-and-benefits view of consumers takes a more postmodern orientation, and views them as emotional beings concerned with achieving pleasurable experiences. EXPERIENTIAL LUXURY MARKETING When a person buys a service, he purchases a set of intangible activities carried out on his behalf. But when he buys an experience, he pays to spend time enjoying a series of memorable events that a company stages to engage him in a personal way. Experiential marketing is thus about taking the essence of a product and amplifying it into a set of tangible, physical and interactive experiences that reinforce the offer. Experiential marketing essentially describes marketing initiatives that give consumers in-depth, tangible experiences in order to provide them with sufficient information to make a purchase decision. It is clear that the fact that many luxury goods are almost always experiential puts luxury marketers in a unique position to apply the principles of experiential marketing to their activities. Dimensions of the luxury experience The term ‘involvement’ refers to the level of inter-activity between the supplier and the customer. Increased levels of involvement fundamentally change the way in which services are experienced, that is, suppliers no longer create an experience and pass it to the customer; instead, the supplier and customer are interactively co-creating the experience. The term ‘intensity’ refers to the perception of the strength of feeling towards the interaction. The four experiential zones are not intended to be mutually exclusive; the richness of an experience is, however, a function of the degree to which all four zones are incorporated. Those experiences we think of as Entertainment, such as fashion shows at designer boutiques and upmarket department stores, usually involve a low degree of customer involvement and intensiveness. Activities in the Educational zone involve those where participants are more actively involved, but the level of intensiveness is still low. In this zone, participants acquire new skills or increase those they already have. Many luxury goods offerings include educational dimensions. For example, cruise ships often employ well-known authorities to provide semi-formal lectures about their itineraries – a concept commonly referred to as ‘edutainment’. Escapist activities are those that involve a high degree of both involvement and intensiveness, and are clearly a central feature of much of luxury consumption. This is clearly evident within the luxury tourism and hospitality sector, characterised by the growth of specialised holiday offerings. The launch of the Royal Tented Taj Spa (Taj Hotels Resorts and Palaces) at the Rambagh Palace in Jaipur (India) recreates the mobile palaces used by the Mughal emperors of the sixteenth and seventeenth centuries, with chandeliers, royal pennants and Indian love swings. When the element of activity is reduced to a more passive involvement in nature, the event becomes Aesthetic. A high degree of intensiveness is clearly evident within this activity, but has little effect on its environment such as admiring the architectural or interior design of designer boutiques. The six-storey glass crystal design of the Prada store in Tokyo conceptualised by the architects Herzog and de Meuron has become a showcase for unconventional contemporary architecture.

Standardized Testing in the Public Education - Free Essay Example

Sample details Pages: 3 Words: 765 Downloads: 4 Date added: 2019/06/24 Category Management Essay Level High school Tags: Standardized Testing Essay Did you like this example? Standardized testing is a distraction and affecting the American public education in a negative way. Standardized testing is harming students learning and has taken over public education. Mary Elizabeth Williams argues that standardized testing has taken over public education. Don’t waste time! Our writers will create an original "Standardized Testing in the Public Education" essay for you Create order She contends that the current testing requirements are resulting in frightening culture change at schools; where a vast amount of energy is spent getting students and teachers ready for testing. Since testing has taken up a teacher ability to teach effectively, this has made a students education come out poorly. There has been a strategy for improving education through standardized testing and has failed to work out. According to Williams My classes are directly affected. My curriculum is affected. My classes are canceled for test prep and they are not made up. An elementary school teacher named Paula agrees that tests take up a lot of time as what can be used as learning time in class. This can change the way students view their education, when they are taking tests, they have to pick the right choice between several options to be successful. Another quote, Absolutely, there are broken schools and faculty teachers who are failing our children every day. But building a better system of public education, to which every child in this country is entitled- takes creative an innovative approach tailored individual communities. Schools shouldnt have their own futures writing on how well children fill in the bubbles in the test scored by score machines. We are making test taking a priority rather than learning in our public education. Test taking is a poor strategy for improving education and destroying American public education. Others may agree that standardized testing is a good way to measure student learning. According to Walberg Over the past four decades, more than 200 public opinion polls complied by Richard Phelps, have consistently shown that the public strongly supports standardized tests. There are high percentage of schools who use standardized testing to measure educational goals, and make sure that high school graduates have acquired knowledge and skills they need for further education in adult life. This offers strong evidence that public schools are in favor of raising standards in American Schools in using standardized tests to measure student and teacher progress. According to Walberg The benefits for outweigh any disadvantages. Being able to give students detailed tests, results help them spot their weakness, increase their learning, and reduced the potential for over confidence. Having to use tests verify that students have accomplished or nearly mastered specific content before introduci ng new material; improves better results. According to, Walberg Well-designed standardized tests can measure knowledge understanding, application of ideas, and other high-level skills. Tests over emphasize factual knowledge and low-level skills throughout a students education. As a student progress in their education, they practice to demonstrate their knowledge and skills in standardized testing. Having standardized tests throughout a students career makes them become better prepared to meet future educational, occupational and professional goals. However, standardized test discriminates against minority and low-income students in college. According to, Soares Soares researched, has found that tests like the ACTs and SATs put low-income and minority students at significant disadvantages and has resulted in a lack of diversity at the nation of 4 year colleges Schools are missing out in a lot of talent that would benefit our states human capital and economic welfare and we could get more youths from our bottom of our families into public universities. Admissions that rely on test scores more than highs school grades are biased towards students from higher oncome and against those form lower income. According to, McDermott The commission advices colleges to scrutinize how they use test scores and urges them to place more emphasis on students high-schools curriculum and achievements. Colleges do not need any standardized tests like the ACT and SAT to be selective in admission. There are more-accurate measures of ability and succes s; that a test score could never portray what a student has experienced, learned and accomplished. According to, McDermott Minimizing the emphasis we place on the SAT can only mean maximizing our students potential for success and happiness. High school students need to have control over their academic future, that the courses they choice and take in high school really matter. Test can distract students and rather than stressing on a test, a student should focus more on their intellectual exploration in school. If university admissions were based in highs schools records there could be hope for our youth focused on learning academic materials and would be a win-win situation for public education.