What are the reasons behind the rising inflation in India
India's increasing inflation has led the population to rely on loans to meet their expenses. The Congress party has claimed that this inflation has severely impacted the general public.
There are several reasons behind the rising inflation in India:
- Supply and Demand: One of the primary factors is the imbalance between supply and demand. The increasing population and rapid urbanization have led to higher demand for goods and services, which drives up prices.
- Global Commodity Prices: India imports commodities like crude oil and food grains, and any increase in their global prices can significantly impact domestic inflation.
- Government Policies: Inefficient government policies and inadequate regulation in sectors like agriculture and manufacturing contribute to supply-side constraints and price hikes.
- Fiscal Deficit: A high fiscal deficit can put pressure on the economy, leading to increased inflation. Government spending and borrowing may exceed revenue, resulting in higher inflationary pressures.
- Monetary Policy: The central bank's monetary policy, such as interest rates and money supply management, can influence inflation levels. Inappropriate policies can fuel inflation.
- Structural Issues: India faces significant structural challenges such as inadequate infrastructure, fragmented markets, and low productivity. These issues can impact supply chains and cause inflationary pressures.
Answered
a year ago