WHAT IS THE BEST WAY TO CONTROL INFLATION IN INDIA?

Question

Due to inflation, people at large in india are suffering a lot. I want to know how to control the rising trend of inflation.

Answer 1

hi,

why you want inflation control? what is the problem if inflation is high. you come in realistic life don't think like politicians. now inflation is on 17 year high means 17 year before was also 12.4% inflation. your life going better day by day, income/salary increasing day by day. my father was getting salary 35years before Rs110/-  Now they are getting pension Rs 13000/- You can also check your family history, i think now all beter than previous

Answer 2

Answer of this question is just political.Inflation mainly contains the price of basic food items,edible oil,pulses,base metals and crude oil.In the past 2 yrs, only crude is moving to sky, production of rest of all is increasing.This is the central govt.`s faillure which is fail to control the inflation.

Answer 3

It depends on what is driving the inflation.  If it is an excess of money supply, then the answer is to increase interest rates, increase bank reserve requirements, and to sell government securities to the banks. These measures also work if the inflation is caused by rising import prices at times when the Indian currency is falling.   Fiscal policy can also contribute to lower demand and money supply by increasing taxes.

If it is from excessive government demand, then the answer is for the government to reduce spending.  If from excessive consumer demand then the government can introduce policies that promote saving over spending.

If it is caused by demographic factors, such as large family sizes and a lot of young people as a percentage of the population, then policies that encourage smaller families will be effective.

Answer 4

there is no best way but there are series of tools that can be used to combat inflation.

as u know that global inflation is increasing but it is due to global factor i.e. oil prices which is not under anyone's control.

the central bank can make use of various tools such as Repo rate, CRR hike. it can levy ban on various export products and can ease of various duties on imports.

how will all this tame inflation?

cheap imports will make the domestic manufacturers cut prices.

CRR and repo rate hike will help in sucking liquidity out of the market which will make the domestic currency dearer and the holding of the domestic currency will give him more value. as there is less holding of the currency the prices will fall.

it is observed that every 25bps points hike in CRR sucks around Rs. 9000 crore from the market.

RBI has used its tools effectively and we may see more such hikes in the near future.