Inflation
The rise and fall of prices is natural but if the rise of prices is not in proportion to the rise of income, it is called inflation. This is bad for the country.
The rise in prices started after the Second World War but it was not so high as to affect the economy of the country.
But during the recent years there has been abnormal rise in prices and it has affected the stability of the nation’s economy. A nation caught up in the inflationary whirlpool finds it very difficult to come out of it. The prices of all commodities rise and it is a chronic disease afflicting a nation. When there is deficit budgeting a country has to resort to printing more currency notes for even higher tax rates and foreign aid do not compensate the deficit. Hence there is larger circulation of paper Currency in the country. This increases the purchasing power of the people leading to further rise in prices.
Though the Government enhances taxes, this is a greater tendency among the people to evade the taxes. As a result, black money has accumulated and it plays an invisible role in increasing the prices of commodities. Further, black money is used for indulging in speculation which also contributes to the inflationary rise in prices. Inflation has created a class of people who are becoming richer and another class of people who are becoming poorer.
The rise of the prices of petrol has also affected prices for we have to import a huge amount of oil every year. This increases freight charges resulting in the increase of prices of commodities. Failure of crops in the sixties has caused scarcity of essential commodities, resulting in overhaul rise of prices. Indo-Pak war was also another cause for the rise in prices.
Indian Government is making a great effort for checking this inflation. Banks have been nationalized so that they cannot advance loans to speculators and monopolists. The rates of interests were increased in order to encourage saving and withdraw currency from circulation. Compulsory Deposit-Schemes have been introduced. To neutralize the inflationary tendencies efforts have been taken to increase the industrial output.
All the efforts of the Government are not very successful for the rise of prices in India can also be attributed to the unethical attitude of the traders. Their only motive is to get as much profit as possible and they try to fleece the customers as much as possible. Stern measures are to be taken against such profiteers and black marketers.
The rise in prices has not been effectively controlled. Demonetization of the currency is suggested as an effective remedy by some economists. But it is an extremely unorthodox method. This may create doubts in the minds of people about the stability of the currency.
One of the effective methods is to take prompt and drastic action against the traders who are mainly responsible for the ever increasing prices.
