Today, India is facing many problems – the problem of corruption, the problem of unemployment, the problem of illiteracy, the problem of population, so on and so forth. The problem of rising prices is one of the most important problems that Indian is facing now. This problem is two-fold to check the rising prices and, if possible, to bring the prices down.
The economists are of opinion that growing economy of the country has given rise to the rising prices. Such economy causes inflation. In inflation purchasing power runs ahead of purchasable goods. In other words, in a growing country, the supply of money increase at once but the supply of goods takes time to increase. Again the population has increased. This has further increased inflation. Because of growing population the current corruption is increasing.
There is another cause of rising prices. The production of consumption goods has been very slowly rising. Our plants are also responsible for the present food situation. High targets were set to be achieved in defense and development. Levels of outlay on the development were suggested. No consideration was given to the existing state of economy. The pressure on real resources has been increasing. The gap between the return and investment also has its effect upon the present price situation.
Thirdly, the kind of system of Government is liable to inflation. Restraint cannot be exercised in spending. Often it happens that claims have to be met mainly allocating funds.
In the period of rising prices, the rich got richer and poor, poorer. The rich own the means of production. They pay the laborers handsomely. But they take of the left hand what they gave with right hand. The cost of goods swells up. The prices naturally go up. What his master gives him, the market takes.
Rising prices encourage hoarding, profiteering,