International Journal of Applied Research
Vol. 4, Issue 11, Part D (2018)
Problems of inflation in India
In modern days, continuously price inflation becomes a great problem for India. By the term ‘inflation’ we simply mean continuously rise in prices of commodities. Inflation takes place if aggregate demand for commodities is greater than supply of commodities in an economy. Aggregate demand for commodity comes from adequate supply of money. Mainly due to increase in government expenditure money supply increases where increase in government expenditure in the developing country like India is inevitable. Inflation also occurs from the supply side of an economy. This means inadequate supply of agricultural products & industrial products. Causes behind less supply of such commodities are dependency on monsoon, volatile nature of agricultural products, inappropriate government policies, speculation of agricultural products etc.So inflation can be divided into two broad type, and cost push & demand push inflation. There are three types of anti-inflationary measures –i) monetary ii) fiscal and iii) other measures like increase in production, price control, rationing, deferred payment and demonetization etc.Monetary measures are increase in bank rate, repo rate and reverse repo rate, increase in cash Reserve Ratio and Statutory Liquidity Ratio, open market operation by which bond or government securities are sold and brought in open market. Fiscal measures are reduction in government expenditures, transfer payment, fiscal deficit and revenue deficit, increase in tax revenue etc.As a countervailing force of monetary policy fiscal measures are implemented. Therefore at last we can say that even though the government has been taken controlling measures to check up inflation, but it cannot wiped out totally which increases poverty among the people in the society such as one can purchase things, but other cannot.
How to cite this article:
Sudarsana Sarkar. Problems of inflation in India. International Journal of Applied Research. 2018; 4(11): 191-195.