What impact does inflation have on the general population in India and how do they cope with it

Inflation has several impacts on the general population in India, and people employ various strategies to cope with it, including the use of loans. Some of the effects of inflation and strategies employed by people in India are:

• Increased cost of living: Inflation leads to higher prices for goods and services, making it more expensive for people to meet their basic needs.
• Reduced purchasing power: Inflation erodes the value of currency, which decreases the purchasing power of individuals. This means people can buy fewer goods and services with the same amount of money.
• Income disparities: Inflation affects different income groups differently, with low-income households being disproportionately impacted. This can exacerbate income inequalities within the population.
• Financial planning: To cope with inflation, people in India often resort to financial planning such as budgeting, saving, and investing. They focus on managing their expenses and reducing unnecessary spending.
• Loan utilization: Taking loans is a common strategy for managing finances in the face of inflation. People may use loans to maintain their living standards or finance their education, housing, or business endeavors.
• Interest rates: A rise in inflation often leads to higher interest rates. To effectively manage their debts, individuals may opt for fixed interest-rate loans to avoid the impact of increased interest payments.
• Investment diversification: People in India seek to protect their savings and investments by diversifying their portfolios. They may invest in a mix of assets such as stocks, bonds, real estate, and gold, which can act as a hedge against inflation.

Overall, while inflation presents challenges for the general population in India, individuals employ various strategies like loans, financial planning, and investment diversification to mitigate its effects.