Post - Liberalization Price Hike In India

The post-liberalization price-hike in India is caused by various factors. The Indian inflation rate was high in the first half of the nineties, due to imbalance of demand-supply, increased money supply, huge fiscal deficits, rise in prices of petroleum products, hike in indirect taxes, wage-rates, salaries, low domestic production, import of food-grains and other products. This inflation rate was low during the second half of the nineties due to reduction in public investment and demand. It was stable during the Tenth Plan period i.e. 2002-07. But there is again hike in the prices of primary commodities since 2007. The recommendations for the control of post-liberalization price-hike in India are 1] The Reserve Bank of India should combine monetary, fiscal and demand supply management measures. 2] Government should cut down undue expenditure and subsidies. 3] Reserve Bank of India should focus on the control of CPI. 4] The PDS should be used for the essentials. 5] The food security should be ensured through agricultural growth.