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Impact of Inflation and Interest Rates on Gdp, India

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Impact of Inflation and Interest Rates on Gdp, India
Program & Batch: | PGDM 2013-15 | Term: | I | Course Name: | BUSINESS STATISTICS | Name of the faculty: | GUNJAN MALHOTRA | Topic/ Title : | THE IMPACT OF INFLATION RATE AND INTEREST RATE ON REAL GROSS DOMESTIC PRODUCT OF INDIA | Original or Revised Write-up: | ORIGINAL | Group Number: | 8 | Contact No. and email of Group Coordinator: | 9999864740ft13himanshuarora@imt.ac.in | Group Members: | Sl. | Roll No. | Name | | 1 | 1301-528 | HIMANSHU ARORA | | 2 | 1301-058 | CHITTRESH DHAWAN | | 3 | 1301-333 | DEEP DAGA | | 4 | 1301-137 | NIKHIL SINGHVI | | 5 | 1301-423 | SWATI SINGHAL |

The Impact of Inflation Rate and Interest Rate on Real Gross Domestic Product of India

Abstract
In any economy the Gross Domestic Product at fixed prices, i.e. Real GDP, is the true indicator of its growth and prosperity and can be looked upon to forecast what the future of the economy will be to be able to take policy decisions in a scientific manner.
This paper aims at examining various macro economic variables and use statistical methods to find the impact of these variables on each other. For this objective secondary data has been obtained about inflation rate (CPI), bank rate and real GDP of India during the years 2004 to 2013. This data is on quarterly basis and hence contains over 30 observations. This data is obtained from the Bloomberg Terminal and the website www.rbi.org.in and regression analysis is employed to obtain findings.
Upon rigorous analysis it has been found out that Gross Domestic Product at fixed prices of India during the period under study is positively correlated with interest rate as well as with inflation rate trends for the said period.

Keywords
Real Gross Domestic Product or Gross Domestic Product at Constant Prices, Base Year, Inflation Rate or Consumer Price Index, Bank Rate and Interest Rate.

Introduction
The Indian economy comes on the 9th position in terms of GDP at market prices and on the 9th


References: Third Quarter Review of Monetary Policy 2009-10, RESERVE BANK OF INDIA, January 29, 2010 Mumbai [Online] Available from: http://rbi.org.in/scripts/NotificationUser.aspx?Id=5478&Mode=0 [Accessed: 1st August 2013]
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