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Articles: My Thoughts | Inflation - solution?
- Mr. Vachaspathi V
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Anybody who has some understanding regarding the basics of financial system will easily understand that the real causes for the raise of prices and inflation are difficult to understand.
However, due to liberalisation the government control over the prices became less, is a fact. Inflation results due to the imbalance between demand and supply. However, even before the liberalisation, there was inflation crisis in India and that Inflation may be ceeping (where the price rice is less than three percent in a year), walking (where the price rice is between three to four percent a year). Running (where the price rice touched ten per cent) or galloping (where the price rice touched cent per cent).
This may be due to the traditional market system that involves mediator like stockist, broker, wholesaler, retailer etc. At any place, the stocks may be hoarded to create artificial demand. At least on some commodities, it is better for the Government to adopt Direct selling mode and sign MoU with Indian Direct Selling Association in this regard to facilitate wealth creation among poor and women.
By doing so, tax deduction at source will become easier and Income Tax payment will be prompt. Moreover, it could solve the unemployment crisis in India and create Capital with the masses for the Investment in Indian Industry.
The raise of petroleum and diesel prices became inevitable for the Government as the Barrel cost touched 120 dollars. Due to it, the transportation cost increases. If the transportation cost increases, the prices of essential commodities will raise. For every payment, if individual receives financial incentive as a privilege, there will no uproar against raising costs. It is possible.
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