GDP and Inflation in India – Thumbnail View
GDP and Inflation are subject to change at different times in Different Countries. These two are the main economic factors for any country. Inflation is nothing but a rising prices of Essential Commodities and a decline in the purchasing value of money.
In a nutshell, if the price of essential commodities is going up, then we will say that the prices are Rising – It’s Inflation. There are other two things called Deflation and Stagflation.
Deflation happens, when the commodity prices are going negative, which is seen as very cheap. The value of Deflation is under Zero. While this may cause to Unemployment and Poor wages. The reason is that the commodities are not getting the Right price.
Stagflation is like a Stagnating, a combination of Rising Unemployment, High Inflation and there is a slow down. On the other hand, Gross Domestic Product is the Total value of Goods and Services produced by a country over a period of time. It is usually calculated as sum of Consumption, Investment, Government Expenditure and Net Exports on Trade.
Most of the Economists claimed that both Inflation and GDP are effective in the short run. In the long run, it may not accurate to compare. In a short term perspective, both are in the opposite Direction.
GDP tells you nothing about sustainability – Joseph Stiglitz
When we look at GDP and Inflation in India, these two have traveled in the opposite direction for the past one year, Since 2018. In the Five year period, Inflation averaged about 4 – 6 Percent and and the GDP growth is subject to volatile every two years. The GDP growth was above 9 Percent which was seen earlier in 2016, is currently at 4.5 Percent.
In the span of Ten years, both seems to be traveling together. Inflation and GDP are on the upswing. Over the course of 25 years, India has seen good Economic growth and inflation at its average.
The Indian Economy has improved over the past 50 years. The Inflation rate has remained with its average prices. For any economy, converting a single rupee to Two is an easy process. At the same time, it is little more difficult from converting one Lakh to Two Lakh rupees. When we grow about 4-5 Percent, we can easily achieve the Double in few years. But converting 8 Percent GDP growth to 16 Percent is really challenging.
The Latest GDP for India is 4.5 Percent in Q2FY20, which is the lowest in last Six years. The recent GDP for China is 6 Percent, which is the lowest in last 27 years. India’s GDP is at USD 2.72 Trillion and China’s GDP at USD 13.60 Trillion. This is such a nature of the Economy.
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