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3/23/2009

INFLATION AND INDIA



INFLATION AND INDIA

Inflation means price rising. We all know the price of commodities are going higher day by day. Whenever the value of money goes down and the value of the commodities go up then inflation is arise.
Cause of inflation
LESS PRODUCTION
The first cause may be less production of commodities and higher consumption. The population of India is increasing rapidly but production is not increasing in that ratio. So in the market demand is increasing and the commodities are not available. So price are going high.


DEMAND PULL FACTOR
Inflation occur when there is more money with consumers to the total numbers of good available in the market. With too much chasing too few goods, prices rise because people are willing to pay more for the same item. This type of inflation usually arises when demand exceed supply.
POLITICS
Inflation is the direct result of the greedy politicians ploy to stay in power.
COST PUSH FACTOR
When there is increase in the cost of production of an item which then get translated into a higher price for that item in the market.
GOVERNMENT POLICY
Planning of the government also affects the market. The government plans are also more theoretical and less practical, a great deal of money and mind is wasted for nothing. So they either fail or do not fulfill the needs of the country. So prices are going higher.
EXPORT AND IMPORT POLICY
Export and import policy of the government is also responsible for prices rise. Sometimes commodities which are needed much in our country are exported in large quantity and shortage is created.
DECREASE IN RATE OF INTEREST OF BANK LOAN
When the money increase market through bank loan then automatically increase the price of commodities. Then inflation is arises.
CORRUPTION IN BUSINESS
Generally businessmen are responsible for the price rise. Hoarding, profit making, black marketing and eruption are the four devils in the business. Some businessmen purchase the commodity on a very low rate and board them this, they create temporary shortage. The demand increase and prices are go up.
Who affected by Inflation ?

Mainly this problem effects of the people of lower level and middle class, people who make the majority of population.
SOLUTIONS
HOARDING, BLACK MARKETING AND CORRUPTION
Government should make policy to restrict the black marketing and hoarding.

INCREASE RATE OF INTEREST
When the bank increase rate of interest then people will be more interested to deposit their money in bank then it’s restrict the inflation to some extent
RATE OF PRODUCTION SHOULD BE INCREASE
When the production of agriculture go increase then price of commodities decrease. As a result value of money increase and then inflation will be decrease.

student of Rai Business School-New Delhi

Sanjeev Kumar Singh

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