Question Q.11GS3GS3
What are the factors that influence the inflation trends in the country? Highlighting the impacts, discuss the institutional measures in place to check inflation.
Main Body
Continuous breach of inflation limit of 6% (with in 2023 along with global high inflation has focused on macroeconomic indicators relating inflation. Factors that influence inflation trends: 1) Demand issues:High demand due to increasing needs post-covid (demand-pull inflation)Increasing imports (due to demand) = Imported inflationRussia-Ukraine war = Costly oil, availability of grains and oilseeds decreasingTaper tantrum of USA's Federal ReserveFlight of investment stagflation 2) Supply issues: (cost-push inflation)Supply chain disruptions due to covid
Poor food logistics such as warehousing, cold storage (Tomatoes price increase by 300% in July 2023)High export price = Black marketing and storing beyond ECA limits Impacts of inflation: 1) Disproportionate impact on poverty (High food and health share at income for MPI poor) 2) Loss of private interestlow investments, high < high demand inflation 3) Non-friendly practices by corporates against consumer Shrinkflation 4) Macro-economic stability affected (1992 BoP Crisis) 5) Decrease market access to MSMEs, cooperatives, FPOs.
Institutional measures: 1) Monetary policy committeeSlab of inflation for maintaining sustainable growth (4+2/-) 2) RBIMonitor money supply and control 3) Statistics office NSO for CPI, WPI to ascertain inflation in sectors 4) Exports and Imports trade:Control of wheat export in 2022 (For curtailing inflation)Control of food export in 2023SRI F support for dealing with inflation Other measures:Decreasing dollar attachment to rupee (Free capital account convertibility minimum) Inflation, even though, has its issues must be maintained at a positive note to promote cyclical and maintain growth rate
266 words1 paragraphs
Conclusion
Inflation, even though it has its issues, must be maintained at a positive note to promote cyclical and maintain growth rate
21 words
Topper
THARUN TEJA
AIR 1232025
Subject & Paper
GS3GS3
Topic
Economic Development
Macroeconomic indicators
Inflation trends and factors
Writing Stats
287
Total words
1
Paragraphs
structured outline
Tone