Problem of Rising Prices – Essay writing

Problem of Rising Prices

At present India is faced with a host of problems of varying urgency, and the problem of rising prices is one of the most serious problems that our motherland is confronted with. In the last five years or so,prices have been rising at a galloping pace. It is now the major national problem and it has eclipsed all other issues before the country. The problem is twofold-to check further rise and, if possible, to bring the prices down.

There are many causes for the rising prices. Economists are of the opinion that the growing economy of the country has given rise to the rising prices. Such an economy causes inflation. In inflation, purchasing power runs ahead of purchasable goods. In other words, the supply of money increases at once, but the supply of goods takes time to increase. During inflation hoarding takes place. This further accelerates the pace of prices. The home cost of goods increases. Foreign buyers will not be attracted to buy such goods. The result is that the foreign market is lost and much foreign exchange is lost. The value of currency falls.

Another cause for the rapid price rise is increase in population. This has further increased inflation. The production of goods is increasing slowly. The current consumption of goods is increasing because of population growth, resulting in price rise. The next reason for price rise is that the production of consumption goods has been very slow. Higher targets were set to be achieved in defence and development. No consideration was given to the existing state of economy. The pressure on real resources has been increasing. The long-term projects have not yet borne fruit. But there has been investment. The gap between the return and the investment has resulted in high prices. Yet another reason for rising prices is that the system of government such as ours is liable to inflation.   Restraint cannot often be imposed on spending.

What are the effects of rising prices ? During periods of rising prices, the rich get richer and the poor poorer. The rich own the means of production. They pay the labourers handsomely. But they take back with the left hand what they give with the right. The cost of goods swell up and the prices rise. Rising prices encourage hoarding, profiteering, black-marketing and corruption. They discourage export. They cause devaluation of currency. They also seriously disrupt the equitable distribution of wealth.

Both long-term and short-term measures are to be adopted to check rising prices. These measures include an appeal mixed with threat to the sellers, raids on hoards, the seizing of black money, the cut of Rs. 400 crores in central expenditure, the increase in bank rates to 5%, the opening of fair-price shops, the rationing of provisions, the import of food grains, the curbing of unproductive expenditure by the Government, the readjustment in the scale of pay and the emphasis on small plans. The short- term measures will help the government to hold the price-line. The long-term measures will help the government to withdraw the huge amount of money pumped into circulation during the past years.

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