What is prime reason for the inflation rate.? What will be the remedy?

Question

What is prime reason for the inflation rate.? What will be the remedy?

Answer 1

So for as inflation in india is concerned three things could be attributed to it firstly, crude oil prices (monopilistic practices by OPEC like organisations).Rupee appreciation which leads to more foreign exchange in terms of low value of dollar agianst indian rupree in the form of FDI and exports receipts .Thirdly the climatic damage in terms of El-Nino in wheat producing countries like Australia it is so because india has always been the major exporter food articles which is steel meeting it after the climatic damage in other expoter countries.  etc  more importantly our domestic shemes like Debt waiver scheme of GOI which indirectly nfuses lots of money. the possible solution could be to defuse the money supply by raising CRR and SLR which RBI has already initiated ,secondly the value of rupee should be devalued which will help reducing the inflow of forex. supplying the money market. third and the most impotant step could be to raise the productivlty in agricutural sector because the demand-  supply lag in this sector is the mainly responsibe factor.finally  alternate sources like solar energy ,to this oil sector should be developed .

Answer 2

Vast over-simplification:  We have inflation right now mainly because the cost of fuel is driving up all costs.  In the US the remedy is usually to raise the interest rate (to slow growth), which the Fed doesn't want to do right now because of the stagnant economy.  We are in an unusual situtation similar to that of the 1970's where there is inflation in a stagnating economy, called "stagflation", ha.  Hopefully, we will adapt to the high prices and stabilize.