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Inflation: whether it has right solutions? Bookmark and Share  
  Author Name : K Ramesh Babu Posted on : April-9-2010 Total Hits: 2477
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The problem of price rise (inflation) posing major hardship for both public and reigning Bapus as well, leading to massive anguish among the populace, in particular among the downtrodden.


The causes for such massive price rise manifold and among them notably are Government policies, reduction in goods production , heavy demand increase, and other reasons relevant such as natural calamities etc.,


Currently, the problem seems to be more acute rather than expected as triggered by global recession and certain amount of natural causes. In the post-recession scenario the government looks out to roll-back all the concessions given to the industry. In the new budget it has suggested for tax relief to the above middle class earners to boost demand and so that revitalize the economy.


Though the regimes idea to reshape the economy has received well and acclaimed with certain quarters, the overall reaction looks to be loss of hope on the sincerity of the regime in finding lasting solutions towards the gripping problem.


The increase in tax limit may trigger inflation along with the fuel price hike and it is evident now the economy is witnessing double inflation crisis where as food inflation continues with the earlier same vigor and fuel inflation has joined with it. Why the government gone for a reduction to enable more money flow rather than restrict that with more tax saving options introduced? By doing this it can increase receipts and contain inflationary tendencies as well?


On the other hand it can reduce the tax components for the fuel will benefit the public with reduced cost of living and enable them to divert the money remains for expanding their needs. In that case, economy will expand without further inflationary process.


Alternatively it can mobilize savings attached with little more interest rate for up to 2-3

Years and let it be implemented by state governments. In turn, they can manage with mobilized money, fund their projects or fill the deficit gap and more over don’t ask the centre for financial assistance up to certain extent.


These measures are little long-term beneficial but give immediate result, that is reduce the inflationary pressure, which is detrimental for the health of the economy.

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