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India Economy 2011. Economic Expansion Would Be Continue Amid High Level Of Public Debt & Current Account Deficit.
Over the past few months, inflation is projected as the most crucial thing to look out for the year 2011. Economists believe, that inflation would remain high and will be a roadblock for the economic expansion, however VMW Intelligence expects inflation will come down to 6 per cent and it was largely risen by huge public debt. What is the fountainhead of this high inflationary pressure in the Indian Economy? Let’s discuss it now!
Theme For 2011: Inflation
The new decade starts with the bang of inflation, and everyone believes it is going to impede the faster expansion of global economy. Predominantly, inflation is playing a bigger role for the policy makers to factor in while cogitating the policy for the sustainable economic expansion and without affecting the current economic growth rate and this trend in real is followed across the globe as the apprehension of discernible impact of inflation on the economy is high. India has a high inflation rate of around 8 per cent and core consumer prices is currently reading at more than 15 per cent, giving policy makers a food for thought for a stricter policy to contain the rise in prices, since VMW believes, high inflation could come down to 6 per cent in the next few months owing to expectations of good crop output resulted by good monsoon rains last year. For now, inflation is rising because there are some reason, which does exist. fundamentally, inflation is rising due to supply side constraint and inflation is not only making a new monthly highs alike gold prices in India, but other largest emerging economies such as China, Brazil and Russia too has high inflation rate at 5.1 per cent, 5.63 per cent and 8.1 per cent respectively and developed economies are also seeing the risk of high inflation. The reason is simple, one: food prices and two: economic recovery around the world pushing commodity prices upward. For every country, abnormal inflation is a problem (deflation too!). What does abnormal inflation means here? VMW have used this term in the context of micro economy for the middle-class population of the country. India’s annual food price inflation rate is more than 15 per cent and making it rowdy for the people to survive with high inflation rate (that’s why, VMW is maintaining negative Political Outlook for the country). At the bottom of the production pyramid of an organization, the price of an article is rising significantly and directly impacting the consumers and inflating the price of the basket of goods. Moreover, consistent rise in government borrowings and expansion of money supply in the United States or so-called Quantitative Easing has also propelled the higher growth in inflation as the expansion of money supply means, more dollars or rupees in hand to spend.
The world- or global economy generally refers to the economy, which is based on economies of all of the world’s countries, national economies. Also global economy can be seen as the economy of global society and national economies - as economies of local societies, making the global one. It can be evaluated in various kind of ways. For instance, depending on the model used, the valuation that is arrived at can be represented in a certain currency, such as 2006 US dollars.
It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the “world economy” vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy—even if currently exploited in some way—and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention.
Beyond the minimum standard of concerning value in production, use, and exchange on the planet Earth, definitions, representations, models, and valuations of the world economy vary widely.
It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult. Typical examples are illegal drugs and other black market goods, which by any standard are a part of the world economy, but for which there is by definition no legal market of any kind. However, even in cases in which there is a clear and efficient market to establish a monetary value, economists do not typically use the current or official exchange rate to translate the monetary units of this market into a single unit for the world economy, since exchange rates typically do not closely reflect worldwide value, for example in cases where the volume or price of transactions is closely regulated by the government. Rather, market valuations in a local currency are typically translated to a single monetary unit using the idea of purchasing power. This is the method used below, which is used for estimating worldwide economic activity in terms of real US dollars.
However, the world economy can be evaluated and expressed in many more ways. It is unclear, for example, how many of the world’s 6.8 billion people have most of their economic activity reflected in these valuations.
In 2011, the largest economies in the world are the United States, China, Japan, Germany, France and the United Kingdom.