Measures to control Inflation

By

In real terms, inflation is the decline in the purchasing power of currency. In India, for example, one can recollect rate of sugar was Rs.5/- to Rs 6/- per kg. in around 1960s. Whereas today it is Rs.40.- and above. Same is also in other segments of the economy. So, it is not the cost is high but the value of currency is going down since the product is the same whereas in money terms, value of Rupee has gone down since more money is being spent now to acquire the same quantity. On the other hand,  production is going down not only due to our more dependency on imported goods which is growing day by day. The rates at which banks are giving loans are becoming costly. Moreover, demand outstrips supply and in order to maintain supply employer has to spend more on labor and materials. Going down of production causes loss of jobs and thus unemployment grows. It is a vicious circle. 

While comparing with the other countries, it is visible that all such countries are also facing problems to settle their economies due to variety of reasons like Russia-Ukraine war etc. and its consequential effects on other allied services in the society. The situation in the countries around India is a glaring evidence of their internal and external effects. 

Though lot of suggestions have been given as to how to control inflation, following steps will be useful in controlling inflation to a large extent in India.

1. Govt. should start giving loans on easy terms preferable to the industries who have the technical knowledge and proper mechanical support to augment the production and to replace the goods which are being imported. Such production will increase job potential besides saving foreign exchange which is being spent on import of such goods. 

2.  No borrowings from other countries for infrastructural projects rather be generated from internal sources, be it at a lower pace. This will save payment of interest in foreign exchange and will make rupee stronger in the world market. 

3. India being a large democracy has to manage and care for its people. In order to maintain control over spending for public cause, it must be checked with strict audit controls. Since in cases, where money taken from Govt. is pumped into others projects in order to make a public service into a business. 

4. It is a fact that charity begins at home. So, in order to bring decency in home spending , a careful system is to be put into practice, restricting charities to the needy rather than giving in open hearted approach to all in such spending. The golden rule to follow is the principle of " Money saved is money earned" and should also be implemented in planning and execution. 

5. More money supply in the different economic channels will help in executing the demand by Public. Be it in the form of increase in salaries, wages and pensions to Public and in tax rate restructuring . More money will generate demand of goods produced locally and not imported. 

6.As mentioned about the vicious circle. when this circle is broken, the economy will automatically start booming and it prove to be a self driven source for the Government

The main driving force is to have attitude to work on it sincerely to achieve as we have all the sources and a well established Govt. fully capable of controlling inflation.


                                            **************   

Comments

Post a Comment

Popular posts from this blog

Qualities Of A Good Prime Minister

By
Following are ten qualities (not in order of importance), which I believe are the most important for a Prime Minister and why ? - 1) Ability to connect with constituents - All great leaders in history had a penchant for being able to connect with their citizens i.e. a strong or habitual liking for something or tendency to do something. Leaders who have failed have probably failed in this domain. 2) Clarity of vision - The Prime Minister who knows their vision and can successfully articulate it to the voting public is one who will be held in high regard. 3) Coherent grasp of domestic issues - There has to be a keen desire and understanding of domestic concerns that directly impact the citizens. Failure to understand and address these issues will create a gap between what the Leader does and how it impacts their citizens. 4) Clear understanding of different cultures in their Governance - All good leaders will be able to understand the Political culture, Ethical/ Racial cultures, Cl
Read more

IMF suggestions for India Growth Rate

By
India's growth accelerated to 7.7.% in 4th quarter of 2017-18 (F.Y.) which was up from 7% in the previous quarter. In order to sustain the high growth rate, following three steps are suggested for India by IMF ( International Monetary Fund) to follow :- 1) To revive a Bank credit and enhance the credit provision by accelerating clean up of Bank and     Corporate Balance sheets & enhancing the growth of Public Sector Banks. 2) To continue fiscal consolidation and to lower elevated public Debt levels by simplifying &     streamlining the Goods and Service Tax (GST ) structure. 3) To renew impetus to reforms of key markets over the medium term, for example, Labor and     Land as well as improving the business climate to improving competitiveness and maintaining     the level of growth in India.  India's Gross Domestic Product (GDP) is poised to grow by 7.3.% in 2018-19 and 7.5% in 2019-20  on strengthening of Investment and private consumption.  Govt. is stead
Read more

Working Of Nuclear Plant and Generation Of Energy

By
Nuclear energy originates from splitting of Uranium atoms- a process called fission. This generates heat to produce steam, which is used by Turbine generator to generate electricity, because Nuclear power plants do not burn fuel, they do not produce greenhouse gas emissions. It is the safe, clean, cost effective alternative contrary to claims by opponents of nuclear energy. Nuclear power reactors use controlled nuclear fission in a chain reaction. With the use of neutron absorbers, the rate of reaction controlled, so the power depends on demand. By reliably providing power 24 hours a day, Nuclear energy is an important part of the energy mix necessary to meet electricity demand. And, with no carbon emissions, it will remain an important clean energy resource for the future. For more than forty years, Duke Energy, USA has operated nuclear plants- setting industry benchmarks for safety and efficiency in the process. Working of a Nuclear Plant - A Nuclear power plant works much like a
Read more

Artificial Intelligence on Business Forecasting

By
The business world today is driven by customer demand. Unfortunately, the demand patterns vary considerably from time to time. That is why it can be so challenging to develop accurate forecasts. The goals of forecasting are to reduce uncertainty & provide benchmarks for monitoring actual performance. A new generation of Artificial Intelligence technologies have emerged that hold significant commitment on improving forecasting process including applications as product demand, employee turnover, cash flow, distribution requirements, manpower forecasting & inventory. Artificial Intelligence systems are designed to bridge the gap between the two traditional forecasting approaches - Managerial and Quantitative. Artificial Intelligence is defined as a Computer Based analytical process exhibiting actions and behavior considered ' Intelligent' by human observers. A.I. attempts to mimic human thought process including reasoning and optimization. One purpose of A.I. is
Read more

FDI - Foreign Direct Investment- Types And Essentials

By
FDI started in India in 1991 in wake of economic crisis and since then it has steadily increased. It is an investment made by an individual or firm in one country into business interest located in another country. Besides being a critical driver of economic growth, FDI is a major source of Non-Debt financial resource for the Economic Development of India. Foreign companies invest in India to take advantage of relatively lower wages, special investment privileges (Tax exemptions) etc for a country where foreign investments are being made. It also means achieving technical know-how and generating employment. The India Govt's favorable policy regime and robust business environment have ensured that foreign capital keeps flowing into the country to improve in view of ease of doing business and relaxation in FDI norms is yielding results. FDI equity inflows in India was US $44.37 billion in 2018-19 mainly on account of Service Sector, Computer hardware and software, Trading, Telecomm
Read more

Satellite Prediction Of Floods In India

By
Floods are one of the most devastating and costly national disasters each year affecting on an average 96.9 million people worldwide and causing $13.7 Billion in damages according to U.N. Office for Disaster Risk Reduction. They wash away or destroy Homes, Pollute Drinking Water and a source to giving birth to water borne diseases. The Indian sub-continent is one of the most affected due to chronic flood events mostly induced by periodic monsoon rainfall. The North - Eastern state of Assam has a complex fluvial systems of rivers, mainly with two inter connected rivers of Brahmaputra and Barak which together enter Bay of Bengal. Due to enormous sediment transport from the upper catchment areas and subsequent lack of carrying capacity of the channels in these two river valleys, flooding is a periodic phenomenon every year during the peak monsoon months from June to Sept. causing extensive damages to life and property. Satellite plays important role in detection and monitoring of flo
Read more

Tools To Measure Economic Progress Of A Country

By
Economic growth is the increase in the Inflation- adjusted market value of Goods and Services produced by an economy over time. It is conventionally measured as the percentage of increase in Real Gross Domestic Product (GDP). Economic reports and indicators provide measurements for evaluating health of our economy, latest business cycles and how customers are spending and generally faring. Given below are Nine points common and vital economic indicators for experts to judge and draw opinions from: 1) M2 (Money Supply) - Does not include Institutional Money Fund Assets, large denominated Time Deposits or Special Reserves Banks required to make. Data released by Reserve Federal System is used to assess current economic and financial conditions and to help alter its Monetary Policy which includes raising and lower interest rates. 2) Real GDP (Gross Domestic Product) -  Real GDP is a comprehensive way to gauge the health and well-being of an economy.It is the market value of all goods
Read more

US Dollar - Effects in the modern economy

By
U.S. dollar is strongest currency which supports U.S. economy. The reason is that more than one -third countries of the world's gross domestic product comes from countries that peg their currencies to dollars. A strong economy will attract investment from all over the world due to perceived safety and ability to achieve return on investment. Since investors seek higher yield on investment particularly from abroad, creates a strong capital account and high demand for dollars. Economic losses of World War have resulted into destruction of capital, trade, human suffering, spread of diseases, displacement of people and destruction of environment among others. Bretton Woods system In the post war scenario, need was felt to have a system to control value of money between different countries. It means that each country had to have a monetary policy that kept exchange rate of its currency within a fixed value - plus or minus one percent - in terms of Gold.This system was agreed upon
Read more

Economy of UAE

By
UAE consists of seven Emirates founded and declared their independence from Britain on 2nd December, 1971 as a federation. Six of the emirates, i.e. Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah & Umm Al Quwain combined on that date. Ras Al Khaimah joined on 10th February, 1972. The total population of seven emirates is 8.3 million ( 38% live in Abu Dhabi, 30% in Dubai, rest in other  areas of Emirates). UAE has never been a British colony but have come under British protection. For centuries, region was involved in rival ties between local Emirs on Land and Pirates on sea. Britain began attacking pirates to protect its trade with India. This led to ties with the Heads of the areas which continued  till 1971 when agreement was terminated. It was due to Britain's imperial overreach exhausted politically and bankrupt financially, Britain decided to abandon thee states. UAE became member of Arab league and member of United Nations in 1971.The country is also a member of OPEC and
Read more

Devaluation and causes for Foreign Exchange rates variation

By
  Indian Rupee and Devaluation  Indian Rupee was settled at Rs.13/- per pound and dollar @ Re.1/-  in 1947 after partition. It continued up to 1966 when first devaluation took place. This was carried out since Govt, was consistently facing balance of payment deficit since 1950 and failure of Govt. efforts to revive and have positive trade balance Moreover, war with Pak in 1965 and cutting off of foreign aid by USA and other countries fueled the crisis.Rise in fuel prices all around did put pressure on inflation as well.  In 1991, second devaluation took place due to downward pressure on Indian Rupee from international markets. It was a part of Economic reforms.The restrictions were relaxed on imported capital goods. Import Export policy replaced import quotas with tariffs causing major overhaul of trade policy Devaluation is undertaken as a means of correcting deficit in balance of payments.        Foreign Exchange variations and causes Foreign Exchange is one of the most impo
Read more