What could be the reasons for inflation in India now?

We can not assign a single reason to the present situation. The primery culprits are the artificial prices of the commodities created by the Govt. through subsidies and then indirect methods of disbursement of the subsidies to the desired population.We cannot keep prices at varience with international prices and persue the policy of trade freedom at the same time.The following could be possible reasons for inflation:

1. The National Rural Employment Guaruntee Scheme Has increased the customer base for food items but it is a possitive development and should be further strengthened.

2. There has been draught and floods last year but it is not expected every year and can be treated as an oppertunity to deploy more manpower under NREGS and remove poverty and drainage problems.

3. The inflation has brought the prices of commodity at par with international prices and the GOVT. should abolish subsidy on various products immidiately and reduce budget deficits. I think the curruption and fear of losing the money bags and votes is weighing heavy on the minds of power that be. If the state can do without money bags, the subsidy can be reduced to half or even less by simply giving the same to the intended beneficiaries directly.

4. The taxation on products should be direct and EXCISE and CUSTOM DUTY should be abolished. As it is the Govt. is not collecting more than 50% of the actual figure and theft and crime are thriving due to these indirect taxation methods.

5. Restrictions on import and export of commodities may be done away with and only anti dumping laws further strengthened to protect the producers at home.

There is a lot that the Govt. needs to do but I think they are unable to do the same due to their own weakness. Let us assure the Govt. that we are with them only if they act in the right direction. There is nothing to be proud of with just 9% GDP growth. It can be many times more.

Manmohan Singh Sikand 

Inflation may result from an increase in the costs of production. This leads to an escalation in the price of the final finished products. This situation arises when there is an increase in the prices of the raw materials. Rise in the costs of labor may also contribute to inflation. This is because the increase in the wages of the labors will make the companies to increase the cost of their products and extract the additional amount spent as wages from the consumers.

As a 2nd largest populated country in the world - we are facing problems of inflation because of demand outstripping supply. The cost of food grains is on an increase because the land for cultivation of pulses and food grains is now being used for cultivating cash crops that can give 2 to 3 yields in a year.

Further with infrastructure and industrialization happening agricultural land is getting converted for industrial purposes - this is creating pressure on the system and we are forced to import food grains and pulses from other countries.

Increase in jobs has lead to increase in purchasing power among the people - with more and more having the capacity to spend - there is increase in demand whereas the supply has not kept pace. And the new consumers are asking for the share in the pie.

Thus we are seeing a spurt in inflation. As long as we are in inflationary trend we are on growth path, we need to check the inflation by tackling hoarders, and utilizing the PDS effectively and providing incentives to the farmers to cultivate more of food grains and pulses.   

The introduction of commodity trading is the main reason for price increase of food items like dhal,pulses etc. Indexes for inflation do not reflect correctly the gap between farmers price and the traders margin. What can be the reason if TATAS ,BIRLAS and AMBANIS focus on household items and trying to replace small provision stores ?They can manupulate the inflation and still try to form an impression that they are competetive. Govt. should immediatly suspend commodity trading of food items.

Inflation may occur if the government of a country prints money in excess that what is actually required, to deal with financial emergencies. This results in the escalation of the prices with rapidity, to keep pace with the currency surplus. This situation is known as the Demand-Pull, which is characterized by forceful escalation of the prices, owing to a higher demand. I believe there is surplus money circulating in India now.

We are talking about Wholesale price index based inflation not the Consumer price index, which is more appropriate.

The issues of base year (currently 2004, I think) / basket mix (especially the 20th century effect) complicated it further.

A shift of Indian economy from agricultural to city base economy,more so of the Mumbai & Delhi type of focused economy without being horizontal across the boundries of cities.

Tapan sur

Price rise is a total failure attributed to the goverment as this may be clearly evident with the fact that sugar price were gone up to the Rs 50 mark only due to the wrong comment by goverment and this is again repeated with the assumed shortage shown by the goverment in milk production.

I hope there is more hysteria of shortage than actual shortage which is being created by political personalities for their vested interests.

There are toomany middlemen in the supply and distribution chain that is leading to price rise. Too many players than required results in profit taking at every stage and also loss of compodity because of poor storage, handling and distribution facilities. There are cases where govt or coperative run fruits and vegetable shops selling fruits and vegetables to road side street vendors as soon as comodities are received by them from the warehouse and downing their shutters allowing the price to rise. Many retailers do not have proper storage and displat facilities especially for perishables resulting in lose of comodities and hence price rise. Perishables are not graded and cleaned before sending to retail shop rsulting in further losses.

Simply CORRUPTION and MISMANAGEMENT is the root cause of not only INFLATION but also INCRESE  in LEGAL CASES in the COURTS

In so called, democratic country like India, the role of opposition party is actually not constructive. black marketing is one of the emerging problem which is an outcome of opposition leadership. They create such malicious situations, in order to drag the economy into trauma so that leading party can be questioned and expelled out of the throne.

Leading party is actually mismanaging the revenues. It has to be concentrated on the welfare and development of the entire country as a whole. there should not be any personal biasement towards those states which are governed by their own people. Duplicacy in currency is also bugging up the INDIA financially. 

At present the opposition in India think that they are to simply oppose every thing ruling party does. If they have to support even a good idea rurling party has to take them in to government and offer key porfolios etc etc. Voter is not questioning the elected mambers. Once elected representative becomes the king and ruler or boss and the voter is mearly a subject and slave. A minister once told the people in distress because of a natural calamity that people should fall to his feet first abd beg, then only he can consider providing releif. Even though media publicised such episode nothing happend to the minister. How can inflation come dowm in such a situation. Lets hope there are some good and efficient people both in government and opposition. Hope they will be able to do some thing and let us support such efforts

the other major reason for inflation can be -  India imports major products like crude oil etc. on which they have to make payments in foreign currencies. so indian foreign liability increases. 

Inflation is situation in which price of essential commodities/goods increase in market for sohrt times.  Prices of essential goods why increase its depends on supply of goods produced in our economy in a year.

One reason of price  increasing of essential commodities is that low or less supply of goods for short  times. Reason of low Supply of goods in the market is that the demand of the goods is low as well as price or value of goods produced in market are not economicaly viable for producer  due to the cost of production is more than the income derived from that goods. Hence, that is the main reason for less supply. Another reason is that some essential goods are seasional items which are avaiable for certain season while the demand due to consumption of these goods remain throught the year  .

But in short term as well as demand of essential goods  increased in market that time less stock of essential goods found in the market . While demand  of essential goods  increased rapidly in market . Therefore a situation came in short term in which supply of essential goods remain low while demand increased and demand & supply law say that when the demand of goods in the market increased and supply is short then the prices of commodities will increase in the market compare the prices found in  normal situation of supply  & demand of goods.

Second, reason of inflation is excess supply of money(currency) in the market.  In inflation period supply of money remain more

INFLATION IS  JOINT EFFECT OF UNEQUAL DISTRIBUTION , FREE ECONOMY ALONG WITH BAD SIDE OF GLOBLISATION . WE HAS TO REMEMBER INDIA IS A AGRICULTURAL BASED ECONOMY, HOLDING MANY CLASS AND SOCIAL PROBLEM ALONG WITH UN UTILISE POPULATION TOO. HOLDING MOBILE IN HAND WHOLE COUNTY IN DEEP COMA MOOD. NOW TIME COMES FOR .............. .