Online Course for Central Armed Police Forces (CAPF) Exam (Assistant Commandant)
Indian Economy
Inflation
Inflation refers to a situation of increase in the general
price level over a period of time. It is a part of business cycles. Every
country experiences it during the process of its growth and development.
Inflation has struck the Indian economy several times since independence. It is
a serious hurdle in the process of growth, as it cause a rise in the prices of
inputs. It also causes a rise in the rate of interest. Implying a rise in the
cost of investment. Further, it cause a fall in real income of the people.
Implying that the people are able to buy less goods and services with the same
money income. The present chapter discuss some of the basic issues relating to
inflation in India. It discusses indicators, trends, causes and effects of
inflation. It also discussed the remedial measures to control inflation.
In a broad sense, inflation is that state in which the prices of goods and
services rise on the one hand and value of money falls on the other. When money
circulation exceeds the production of goods and services, the state of inflation
takes place in the economy. Inflation is of two types: