INFLATION NATURE, CAUSES, EFFECT AND CONTROL IN INDIA

The simplest and most useful definition seems to be that inflation is a state in which the value of money is falling, i.e. prices are rising. Inflation is usually associated with rising activity and employment. Inflation exists when money income is expanding more than in proportion to income earning activity”. Developing countries in their bid to raise the standards of living of their people through development plans have often found themselves in the grip of inflation. By inflation we mean a general rise in prices. To be more correct, inflation is a persistent rise in the general price level rather than a once - for-all rise in it. On the other hand, deflation represents persistently falling prices. These days all the economies of the world, under developed as well as developed, suffer from inflation. Inflation or persistently rising prices is a major problem in world today. Two important features of recent inflation in various countries of the world are noteworthy. First, the rate of inflation in recent year during tenth and eleventh century has been very high as compared to the rates of inflation experienced earlier during peace periods. In some countries rate of inflation has been 14 percent per annum during the recent years. Second, in sharp contrast to the earlier periods, inflation in recent year coexists with a high rate of unemployment. The occurrence of inflation along with a high rate of unemployment is a new phenomenon and has made it difficult to control rising prices