Inflation or Rising Prices global issue

Inflation or Rising Prices Global issue

Outline:   
1. Introduction: Inflation has gripped every country.
2. Causes of inflation are:
i. Defective economic policy of the government
ii. Import of luxury items
iii. Difference between the demand and supply of goods
iv. Rise in the standard of living
v. Inflow of foreign aid.
vi. Outbreak of war
vii. Increase in population
viii. Low production,
ix. Rise in prices in the international market.   
3. Some suggestions to control inflation.
4. Conclusion: Result-oriented policies required to check inflation.

Inflation means, "The rise in prices brought about by the expansion of the supply of black money. Today inflation is not limited to any country, but it is an international problem. Any major event in any part of the world has its impact on other parts of the world. Moreover, the major currencies of the world e.g., dollar, pound, riyal and franc, etc. are interlinked. Rise and fall in one currency naturally affects others and this leads to inflation. Inflation is a continuous process. It curtails the purchasing power. Nobody can turn the clock back. Every other day the prices of fuel and essential commodities increase at an alarming rate, beyond the reach of masses.

There are many causes of inflation. The first arid foremost cause is the defective economic policy of the government. Sometimes the government spends huge amounts of money on non-productive projects. There is unnecessary expenditure on administration. Government functionaries sit in spacious, well-furnished offices and move in luxurious cars at the expense of the masses. To meet these unnecessary expenses, the government taxes the people, or issues more currency to meet budget deficit. It leads to rise in prices. Secondly, the import of luxury items also leads to inflation. People want to spend beyond their resources. They try to buy more luxury goods and thus raise their standard of living. This results in a rat race for money and also forces the people to earn by foul means. The poor are hit hard by this trend. Thirdly, the difference between the demand and supply of goods raises the prices. To raise their standard of living, the people need more goods, but their production or supply on the contrary, is not sufficient. Hence, the goods available sell at higher prices. Fourthly, rise in the people's standard of living causes large-scale inflation. People are prepared to buy luxury goods at any price.

The fifth cause is the inflow of foreign aid which, instead of being spent on productive or development projects, is misused by government functionaries on personal overdoing. They spend it on luxury items. Sixthly, the outbreak of war in any part of the world leads to inflation, The combatants are the Worst affected. The money to be spent on development projects and essential commodities is spent on the purchase of armaments. The country's as well as the people's purchasing power is badly affected. Seventy, the increase in population affects the supply and production of goods. Hence goods available in the market sell at high prices. The final cause of inflation is the rise of prices in the international market. The world, is shrinking day by day. Inflation in one part of the world gives birth to inflation in other parts.

Various measures can be taken to check inflation. Firstly, the government should devise realistic economic policies. It should curtail its undue expenses on non-productive schemes and administrative structure it should inculcate simplicity among its functionaries. It should not unnecessarily issue currency notes. Secondly, the import of luxury items should be totally banged. Thirdly, the wide gap between the demand and production of goods should. be lessened. Moreover, the production in factories and mills should be enhanced. Fourthly, people should be motivated not to squander money on luxury items as cars and cosmetics.
They should be inspired to lead a simple life. Richly, foreign aid should be spent on projects for which it is meant. Sixthly, all the countries, of the world should settle their disputes peacefully. Seventy the government should propagate population planning to check population growth. Lastly, the should desist, from levying new taxes after every three or six months. This unhealthy practice affects the purchasing power of the people. The salaried class and the labored are the worst hit by this practice.
Though it is an uphill task to check inflation, it can be controlled wisely with the cooperation of the government and the people. The government should not tax unnecessarily and the people should learn to live simply The government can prevent the traders from raising prices by opening large number of Cooperative Stores and Utility Stores where essential commodities may be available at reasonable rates. If the need arises, the government should also import these commodities. This step will check hoarding.