The rising of prices is a world-wide phenomenon. It is acute in developing countries. It affects everyone. The rich can, however, afford it. The victims are the poor in society. The manufacturers and merchants can make good profit.
When prices increase, people demand higher wages and salaries. When they cannot put up with the rise, they resort to strikes and demonstrations. When the demand for higher wages and salaries are and with, manufactures increase the prices of their goods. The government too increases taxes. Then fresh demands are made. Thus, this vicious circle continues.
Those who have fixed salaries, wages and pensions are in a tight corner when prices rise. They have difficult in making both ends meet, since their purchasing power remains reduced. The additional Dearness Allowance that is usually sanctioned does not give them any relief.
There are various causes for the rise in prices. Our economic planning has some serious drawbacks. We implemented Nine Five Year Plans. The public expenditure increased, but the targets of the Plans could not be achieved. This made the government resort to deficit-financing. The result was inflation. The administered prices of most of the agricultural products have created massive increases in recent years. There is sufficient room to evade taxes, which then_ leads to the growth of black money. There is a parallel economy, mainly created by smugglers and hoarders etc. Population explosion creates more and more demand. The frequent rise in the prices of petroleum products, scarcity of raw materials, increase in electricity charges and non-developmental expenditure, natural calamities and the liberalisation policy of the government make the masses pay through their noses.
The government should remain vigilant and take severe action against those who are engaged’ in hoarding, black marketing and smuggling. The existing taxation laws have to be amended so that no one can evade paying taxes, Strikes and bandhs must be avoided as far as possible. The consumers should realise the rights they have and take effective steps to get their grievances redressed. Sincere efforts have also ‘to-be made by the government of India to check the growth of black money. According to an estimate made by the International Monetary Fund (IMF), India has the,-highest growth of black money in the world. Production should be augmented for the increasing needs of the people.