INFLATION IN INDIA

Sanjeev Rathore, a 35-year-old business men  from Noida, earns around Rs 80,000 per month. A decade ago, he earned only a fraction of that. Yet, he says he was happier then than now. “My cost of living has gone up dramatically in recent months. I have absolutely no disposable income left at the end of the month,” says Rathore.

What is the cause for this ever rising price of commodities inIndia?

Inflation –

A sustained rise in the prices of commodities that leads to a fall in the purchasing power of a nation is called inflation. High levels of inflation distort economic performance. Several, such as the printing of more money by the government, a rise in production and labor costs, increased taxes or wars, can cause inflation. Economic inflation may be caused by either an increase in the money supply or a decrease in the quantity of goods being supplied. Inflation occurs when the cost of producing rises and the increase is passed on to consumers. Inflation has become a major concern worldwide in 2011, with global prices rises in oil, food, steel and other commodities being the culprit.

What can be done?

Indiahas comfortable levels of food grain stocks. The release of these stocks together with faster distribution can help contain rise in price of food grains. State government should take effective action against hoarders and black marketers.Indiahaving comfortable Foreign Exchange Reserves, a part of it can be used for bulk import of essential commodities like pulses, fruits and vegetables etc. Since farm productivity is not showing desirable growth there is urgent need to focus on research as well as better agricultural practices to ensure that productivity levels are increased in the shortest possible time. Special attention should be given to the states with relatively low productivity. In the long term, measures to improve the functioning of markets (for example, investments in rural infrastructure) and value-addition (such as agro-processing, cold chains) could offer more efficient and cost-effective methods of relieving seasonal gluts.Indiawill have to invest more in agriculture to be able to meet the objective of food security of a growing population.

Karthik P S B, I CAMS – J

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