Meaning: Inflation refers to a situation when the there is an increase in the prices of general goods and services resulting in the overall decline in the purchasing value of money.
During the last one decade prices have soared continuously. In the last five years or so the prices of essential commodities have started rising at a galloping pace.
Main Causes of Inflation: There are many other factors which are also responsible for the economic crisis called Inflation.
The greedy capitalists created artificial shortages in the country. They hoarded the good and later on sold these at high prices. The black-marketers and the smugglers also had a good time.
As a result prices of essential commodities like rice, wheat, edible oil textiles, salt, sugar, coal, petrol etc. have gone so high that it is beyond the capacity of the poor and the middle-class people to purchase them.
Moreover, the Government distribution system is not perfect. The rural poor are left to the mercy of the dishonest traders.
Lastly, as there is no organized consumer resistance, the prices are rising day by day due to inflation that should be checked immediately.
Measures to control Inflation: The measures for controlling inflation are discussed below in points:
Increase in interest rate is an important measure to control Inflation.
To check the rise in price the Government should not only build up an adequate stock of food grains but also maintain a public distribution system throughout the country.
Increase in production of industrial goods and agricultural crops.
To set up industrial growth and production, sick industries should be revived and industrial disputes should be settled.
The supply of essential items at subsidized and fixed rate throughout the country should be arranged.
It should take firm steps to prevent traders to indulge in hoarding of essential commodities.