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Articles: Business
Inflation..Some facts
- Mr. T.R.Sridhar Prasad. Uppalapati.
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For ex : the food grains prices, if any crop loss ocurs, the supply decreases and prices will increase this kind of inflation is known as demand pull inflation. Similarly if the income levels of people increase and if there is certain levels of disposable income and if the supply for a particular goods and services remains constant, the prices will increase. For ex : at present in India, the bank credit is easily(at cheaper rates too) available and there is also considerable increase in the income levels of people due to economic reforms (economic reforms include globalisation, privatisation and liberalisation), and hence there is a considerable increase in the demand for goods and services. The economic reforms increased the empoyment opportunities remarkably and thus more income and more demand for goods and services. The finance minister opined that the present inflationary trends are not in our control as we are importing inflation, in other words, as we import oil to meet our growing domestic demands and the international oil prices have touched a new levels of $134 U.S./ barrel, the domestic fuel prices are bound to increase. The international oil prices are expected to go up to $150 U.S. by july end. In India though we have good amount of petroleum resources, the demand far exceeds the supply and we import nearly 70% of requirements from other countries. Whenever the political situation is grim in such countries,the supply of oil decreases as production falls,thus prices increase. For eg: During Gulf war in 1991, the inflation was very high in India due to reduction in the supply of oil. Some economists opined that the increase in fuel and food prices are responsible for the present mess. The prime minister Mr.Manmohan Singh advised the citizens of India to be patient until the rabi crop comes to the market. The agiculture minister Mr.Sharad pawar, opined that the south indians are eating more and more roties (made of wheat) and hence there is an increase in the demand for wheat, though there is no increase in the supply of wheat.

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