Sunday, February 21, 2016

Impact of Rising Pricing in India

The problem of rising prices is one of the most important problems that India is facing. Over the past several years,rising prices have become a painful economic tragedy in India’s national life. It gives rise to widespread distress, especially the vulnerable sections of the society who are already living below poverty line and also among those in the fixed income group,i.e daily wage earners and  the salaried classes. Because of persistent increases in the prices of the essential commodities of life, the number of people living below the poverty line has been steadily increasing. 

The unprecedented rise in prices of almost all the important necessities of life has posed a serious problem before india. Most people in india find it hard to earn one meal a day, because prices of food grains, edible oils, sugar, other daily life usage materials and other food articles have been raising very sharply. This alarming rate of increase in prices has made common man’s life miserable in India.. This increase in prices is not the result of any simple factor. Several factors has played crucial role in it.

Price rise does occur in the process of economic development. But in India the rise of price has been much higher than what it should have been. One of the reason of high price is holding the inventories and selling it at higher price. It creates artificial scarcity in-spite of increase in production and results in price rise.Thats called ‘black marketing’ The rapid growth of population means more demand of food, of clothing and other basic necessities as compared to supply of goods and services which result in price rise. It means printing more currency notes and coins and that causes the ‘inflation’. 
In India deficit financing is done mainly to meet the budgetary deficit i.e printing of more currency by central bank of India. It results in more supply of money in the economy than the required but when there is condition where there is increase in supply of money corresponds with less increase in the supply of goods in the economy than there is rise in price of goods and services. Increase in money supply shows that people in an economy are ready to spend more money for buying goods and services.

In a growing country like India, the supply of money increase at once but the supply of goods takes time to increase and increase in population has further increased inflation. Because of growing population the rate of corruption tends to increase which further contribute to price rise.And such vicious cycle goes on to built. We can certainly apply our minds to identifying and controlling or at least mitigating those internal factors which may be aggravating the situation as it is difficult to control the external factors. The main culprit is inflation i.e a situation where supply of currency exceeds the required demand. 

Rising prices encourage hoarding, adulteration, black –marketing and corruption and discourage exports and thus cause devaluation of currency. This seriously disrupt equitable distribution of wealth. The govt. need to look into all aspects in its policies to address the pressing farmers issue, otherwise the present problem of price rise and farmers suicide going to increase many fold. 
The problem is very serious. It needs various measures – short and long term, to be adopted. 

The govt. Need to create and adopt such mechanism at the earliest to liberate the farmers from the clutches of middleman. Measures such as proper check in FCI and other godowns to prevent black marketing is need of hour. By stocking through these godowns, the culprits creating artificial price rise and then it encouraged black marketing. The high inflation can be fully controlled if the govt. and the concerned authorities make proper check on the market and raid various godowns across the country. 

This blog post is inspired by the blogging marathon hosted on IndiBlogger for the launch of the #Fantastico Zica from Tata Motors. You can apply for a test drive of the hatchback Zica today.

No comments:

Post a Comment