Page 121 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH
P. 121
Unit 10: Critique of Indian Economy Policies—Pre and Post Reforms
2. Moderate inflation : It can be differently defined around the world, given the different Notes
inflation histories. As an indication only, one could consider an
inflation as moderate when it ranges from 5% to 25-30%. For some
countries, the higher part of this range is already "high inflation".
3. Low inflation : It can be characterized from 1-2% to 5%. Around zero there is no
inflation (price stability). Below zero, a country faces deflation.
4. Hyperinflation : It is the most extreme inflation phenomenon, with yearly price
increases of three-digits percentage points and an explosive
acceleration.
5. Extremely high inflation : It could range anywhere between 50% and 100%. High inflation is a
situation of price increase of, say, 30%-50% a year. Both kinds can be
stable or dangerously accelerate to enter in an hyperinflation
condition.
6. Deflation : In economics, deflation is a decrease in the general price level of goods
and services. Deflation occurs when the inflation rate falls below 0%
(a negative inflation rate). This should not be confused with
disinflation, a slow-down in the inflation rate (i.e. when inflation
declines to lower levels). Inflation reduces the real value of money
over time; conversely, deflation increases the real value of money -
the currency of a national or regional economy. This allows one to
buy more goods with the same amount of money over time.
10.6 Review Questions
1. Discuss the role of Public Sector.
2. Why is there a need for economic policy? Explain.
3. What do you mean by pre an post reforms
4. Critically examine the Indian Economy Policies.
Answers: Self-Assessment
1. (i)(e) (ii)(e) (iii)(d)
(iv)(d) (v)(c)
10.7 Further Readings
1. Indian Economy; Gaurav Datt and Aswani Mahajan; S. Chand and Company
LTD. Ram Nagar, New Delhi-110055.
2. The Indian Economy; S.K. Ray; Prentic, Hall of India Private Limited
New Delhi - 110001.
LOVELY PROFESSIONAL UNIVERSITY 115