Price Rise Rising Prices: One has to live from hand to mouth. It has made difficult for everyone to meet both ends.
India is faced today with one of the most critical economic situations. Inflationary pressures are doing plenty of mischief and the people of middle class families are finding it a Himalayan task to make both ends meet.
In a developing economy, prices usually display an upward trend. They spare neither the rich nor the poor, neither the producers nor the consumer. They make a economic activities uncertain and unstable, causing great unrest in the minds of the people.
Prices are expressed in terms of money. When the rupee or any other currency buys much less than what it used to, and more is to be paid for practically every item, then the problem of rising prices comes into being. Where the balance between money supply on the one hand and goods and services on the other is disturbed, a critical problem arises.
If money supply increases more than goods and services available prices will rise. The fixed-income groups like salaried people, wage-earners and pensioners are the most helpless victims of inflation.
As prices rise, their real income gets eroded.
The additional dearness allowance which the government sanctions from time to time proves of no use to them, because their purchasing power actually goes down. High prices also adversely affect the exports of the country and distort the balance of foreign trade. In a developing economy a certain rise in prices in inevitable for at least three major reasons.
The new incomes are not proportionately reflected in saving because a majority of the beneficiaries have to spend most of the additional money they get on satisfying unfulfilled needs.
Secondly, the same programmes of economic development as generate the new money incomes push-up the demand for certain goods wanted also by the consumer, such as agricultural products, fuel, housing materials and the like.
A third reason, of which the first two may be looked upon as special cases, is the large increase in currency in emulation and the operation of the law of supply and demand. Unless the production of basic consumer goods keeps pace with the increase in currency that is rendered inevitable by large scale, long term planning, prices are bound to rise even of the production of consumer goods is maintained at the old level.
Numerous factors can be cited to explain price rise in India First, our economic planning has suffered from serious drawback, right from the beginning. During the various Five-Year Plans, while the public expenditure persistently increased, the production targets were never realized.
Secondly, this forced the Government to resort to deficit financing. The Third, major factor responsible for price rise is that due to great emphasis laid on heavy industries in our Five-Year-Plans, agriculture and consumer goods industries, which produce the items required by the people, have received insufficient attention.
Fourthly, in an underdeveloped economy like ours, the first increases in income always tend to be expended on food articles. In other words, the level of consumption tends to increase with increases in income.
The cumulative effect is a growing pressure on prices.The prices are soaring up more than the income in India. The middle class are being hit hardly with the price rise.
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