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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.



















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