India GDP overview

The Gross Domestic Product (GDP) in India was worth 2073.54 billion US dollars in
2015. The GDP value of India represents 3.34 percent of the world economy.
Indias GDP has shot up by 64% since 2008
2007-08
Due to the US-Sub prime crisis and high number of recessions, GDP fell to an
extreme low.
2009-10
Though Indian GDP should have reduced in 2009 itself, Govt spending have did not
let that happen. Thus, the GDP did not fall too drastically till 2010.
2010-14
Huge Govt spending led to higher fiscal deficit(FD) and increased cost of borrowing
for Govt. Due to heavy borrowing by Govt, cost of borrowing for Indian businesses
also became high, causing less investment, resulting in less supply, more inflation,
less GDP.
Real GDP growth or Gross Domestic Product (GDP) growth of India at constant
(2011-12) prices in the year 2015-16 is estimated at 7.56 percent as compared to
the growth rate of 7.24 percent in 2014-15

Chart Title

India Inflation overview

Inflation in %

Inflation Rate in India averaged 7.59 percent from 2012 until 2016, reaching an all-time high of
11.16 percent in November of 2013 and a record low of 3.69 percent in July of 2015.
2005-2006
The softening of inflation to 4.4% in 2005-06 largely owes to monetary tightening measures
(hike in CRR, reverse repo and repo rates) adopted by the RBI.
2006-07
The inflation based on WPI, however, firmed up again in 2006-07, as a result of the hike in the
prices of petrol and diesel by Rs. 4 per litre and Rs. 2 per litre respectively on July 6, 2006,
following the upsurge in the price of crude (Brent*) to an average of US $ 70 per barrel from US
$ 54 per barrel in 2005.
2008-09
The year 2008-09 turned out to be a very unusual year, marked by extremes in price movements
and recording the highest inflation in the current decade (2000s). The 8.4% inflation recorded
for this year was mainly influenced by the high inflation in first three quarters, as inflation began
cooling from the last quarter in the aftermath of global financial problems and recession.

2013

In 2013, the consumer price index replaced the wholesale price index (WPI) as a main measure
of inflation. In India, the most important category in the consumer price index is Food and
beverages (45.86 percent of total weight). Housing accounts for 10 percent; Transport and
communication for 8.6 percent; Fuel and light for 6.84 percent; Clothing and footwear for 6.5
percent; Medical care for 5.9 percent and education for 4.5 percent.
2014-15
So, what was it that brought retail inflation down from 11.24% in November 2013 to 5% for
December 2014, after touching record lows of 4.38% in the previous month (November 2014)?
And what factors controlled the wholesale price index, which fell to zero for November 2014,
lowest in five-and-half years?
Effectively, there were three major reasons why inflation subsided, to drop much below the
Reserve Bank of Indias (RBI) target of 8% by January 2015 and 6% by January 2016.
Firstly, food and fuel prices that had significantly spiked during 2013 condensed. These two
items together constitute 57% of the consumer price index (CPI), which measures the change in
prices of a select basket of goods and services over a time period for Indian households.
Simultaneously, vegetable prices plummeted 13.2% between December 2013 and January
2014 primarily on account of greater supply.
The better prices fetched during the tail end of 2013 helped farmers bring more land under
cultivation, and plant more, thus producing more, leading to an oversupply in early 2014. Higher
production in 2013-14 has been achieved by expanding acreage, said the Economic Survey
2013-14.
Crashing oil prices also helped. Global prices of crude oilwhich generates the biggest import
bill for Indiahave been dropping since June 2014.
From $111.25 per barrel in the middle of June, 2014, US crude prices dropped by over 95% to
$56.55 per barrel in December 2014.