Impact of Rate of Inflation and Growth of Savings in Indian Economy

Abstract

The purpose to conduct an analytical study of the varying rates of inflation in a given time period and find the relationship that savings could have into effecting this so described inflation in the Indian economy. It is often noted that inflation and savings can be seen as constantly fluctuating, which is a result of unstable economic and political circumstances. There are several factors such as interest rates of banks, the consumer spending capacity, the consumer income and several other external factors in the Indian economy that have varying impacts on savings of an individual and also a fluctuating change in inflation. Here, inflation can be assumed to be of two types – anticipated inflation and unanticipated inflation where the anticipated inflation is more preferred than the later. In this study, an inference is drawn by attempting to find a relationship between savings and the rate of inflation by conducting a co-relation analysis on the collected data. These findings aid individuals in understanding of how the recent trend of fluctuating rates of the inflation can impact the total elasticity of savings that an individual has even by small amounts in the short period of time.