TRENDS AND DETERMINANTS OF INFLATION IN INDIA DURING 1993-94 TO 2010-2011

Dr. S.S.Jeyaraj

ABSTRACT The last decade has witnessed a great deal of theoretical and empirical research on the relationships between inflation and prices of Primary Article, Fuel and Power and Manufactured Products and other foods commodities in India. The present study analyses changes in the price of Primary Article, Fuel and Power and Manufactured Products and other foods commodities in India from 1994-95 to 2010-11 by using WPI with base year 1993-94. The secondary data were collected for this period. The study also analyses the change in prices and seeks to discover major drivers of inflation. It examines other inefficiencies associated with noncompetitive pricing, which matter for estimating the cost of inflation. This paper analyzes the restrictions necessary to ensure that the policy rule used by the central bank does not introduce real indeterminacy into the economy. A robust conclusion is that to ensure determinacy, the monetary authority should follow a backward-looking rule where the nominal interest rate responds aggressively to past inflation rates. It concludes that the inflation has been driven mostly by price increase of primary goods. Ensuring good harvest, RBI effective monetary policy to reduce demand at reasonable level and measures taken by government of India to increase the supply may reduce inflation. Key words:- Inflation Perceptions; Inflation Expectations; Inflation, Central Bank behaviour, Consumer Price Index.

Title:	TRENDS AND DETERMINANTS OF INFLATION IN INDIA DURING 1993-94 TO 2010-2011
Author Name:	Dr. S.S.Jeyaraj
Abstract:	ABSTRACT The last decade has witnessed a great deal of theoretical and empirical research on the relationships between inflation and prices of Primary Article, Fuel and Power and Manufactured Products and other foods commodities in India. The present study analyses changes in the price of Primary Article, Fuel and Power and Manufactured Products and other foods commodities in India from 1994-95 to 2010-11 by using WPI with base year 1993-94. The secondary data were collected for this period. The study also analyses the change in prices and seeks to discover major drivers of inflation. It examines other inefficiencies associated with noncompetitive pricing, which matter for estimating the cost of inflation. This paper analyzes the restrictions necessary to ensure that the policy rule used by the central bank does not introduce real indeterminacy into the economy. A robust conclusion is that to ensure determinacy, the monetary authority should follow a backward-looking rule where the nominal interest rate responds aggressively to past inflation rates. It concludes that the inflation has been driven mostly by price increase of primary goods. Ensuring good harvest, RBI effective monetary policy to reduce demand at reasonable level and measures taken by government of India to increase the supply may reduce inflation. Key words:- Inflation Perceptions; Inflation Expectations; Inflation, Central Bank behaviour, Consumer Price Index.
Cite this article:	Dr. S.S.Jeyaraj , " TRENDS AND DETERMINANTS OF INFLATION IN INDIA DURING 1993-94 TO 2010-2011 " , International Journal of Application or Innovation in Engineering & Management (IJAIEM), Volume 3, Issue 11, November 2014 , pp. 038-049 , ISSN 2319 - 4847.
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