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Articles: Business | Inflation..Some facts - Mr. T.R.Sridhar Prasad. Uppalapati.
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The U.S.A. president also expressed almost the same view by stating that the people of India and China are eating more foodgrains due to increase in their income levels, and thus there is an increase in the demand for foodgrains. Some experts also opined that the foodgrians are being used to 1. produce ethanol (a substitute for petroleum). 2. feed the animals to produce meat, as the demand for meat is more than the food grains in U.S. and China. In China and U.S.A., the people are not bothered much about the prices of foodgrains as they are for the fluctuations in the prices of meat. The demand for metals has also increased considerably, for eg: China has increased the imports of iron ore in the recent past. Thus the present inflationay trends are due to the rising prices of 1.fuel, 2.food, and 3.metals.
The goverment has been taking various measures to contain inflation, such as 1.Monetary measures, 2.Fiscal measures and 3.Administrative measures. The UPA chair person Mrs.Sonia Gandhi and the prime minister advised the state governments to reduce the excise duties on petrol to reduce the consumer prices. Many state governments took the initiation, for eg: In Delhi the cost of domestic LPG cylinder is costlier by only Rs. 10/- and In Andhra Pradesh there is no increase in the cost of lpg cylinder at all, i.e. the entire burden will be borne by the state government. Similarly the Kerala and Tamilnadu state governments increased the duties on oil only marginally, thus protecting the interests of consumers.
The central government also adjusted various customs and excise duties on several goods to increase the domestic supply. As far as the monetary measures are concerned, the RBI has increased the CRR (cash reserve ratio) to reduce the supply of money. More supply means more money in the hands of people and more demand for goods and services.
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