Cause of Rising PRICESRising price is one of the big problems that our country as well as our state facing today.The prices are escalating following the devaluation of the rupee.In a short span of years, the prices have increased manifold.The price situation is worsening and it has taken place as a major national problem outstripping all other issues.
The problem, on the face of it, may seem to be quite simple.But in fact, it is not.It is closely related to the welfare of the people.It owes much to the administrative efficiency of the Government.The last but not least important is the fact that the success of a Government depends largely on the behavior of prices in the country. The problem of rising prices has wide ramifications. It is the result of operation of a large number of causes.
The present drawbacks and troubles are mainly the result of a derailed development programme based on adhocism and drift. While concentrating on food production, the Government appears to have overlooked the obvious fact that in years of agricultural prosperity,demand of cloth,edible oils,vegetables,fish,meat and milk,etc.,is bound to increase. These are precisely food items,which have been showing maximum price increase. Another cause for the rapid price rise is the increase in population. This has further accentuated inflation. The production of goods is expanding slowly. The current consumption of goods is increasing because of the population explosion,resulted with their price rise.
The repercussion of inflation are dangerous. During inflation there takes place a widening of profit gap because the demand is in excess of the supply. The scarcity of goods provides opportunity for all sorts of evil practice to thrive. The chances of profit are fast increasing and there is a great market for goods. Therefore,there takes place stock piling of goods or what is popularly known as hoarding. Hoarding further accelerates the pace of price. The home cost of goods increases. The foreign buyers,therefore,will not be attracted yo buy such goods. The result is that foreign market is lost and much foreign exchange is missed.The value of rupee falls.
In a developing country,prices are bound to increase. There can be no absolute price stability. But limits should be defined. Price increase must be matched by increase in national income in real time.