Rising prices is one of the big problems that the world is now facing. The prices are escalating following the devaluation of the rupee in short span of years, the prices have increased manifold. The price situation is worsening and it had taken place as a major national problem outstripping all other issues.
The problem, on the face of it, may seem to be quite simple. But in fact it is not. It is closely related to the welfare of the people.it owes much to the administrative efficiency of the people. It owes much to the administrative efficiency of the government. The last but not least important is the fact that the success of a government depends largely on the behavior of the prices in the country. The problem of rising prices has wide ramifications. It is the result of operation of a larger number of causes.
The present drawbacks and troubles are mainly the result of a derailed development program based on aphorism and drift. While concentrating on food production, the government appears to have overlooked the obvious fact that in years of agricultural prosperity, demand for cloth, edible oils, vegetables, fish, meat and milk, etc., is bound to increase. These are precisely food items, which have been showing maximum price increase. Another cause for the rapid price rise is the increase in population. This has further accentuated inflation. The production of goods is expanding slowly. The current consumption of goods is increasing because of population growth, resulted with their price rise.
The repercussions of inflation are dangerous. During inflation their takes place a widening of profit gap because the demand is in excess of the supply. The scarcity of goods provides opportunity for all sorts of evil practices to thrive. Stock piling of goods causes hoarding. It further accelerates the pace of prices.
In a developing country, prices are bound to increase. There can be no absolute price stability. But limits should be defined. Price increase must be matched by increase in the national income in real turns..