Inflating Indian Economy

India's Inflation rate is around 5.5% which is really high and it has increased over the period of last 5 years and it is a serious matter of concern.
The main reasons  of inflation in India are as follows-

• High demand and low production of goods and services. Along with the major supply of multiple commodities creating a huge gap in  demand-supply cycle leading  to a hike in prices

• More  circulation of money leads to inflation by way which the paying capacity of richer increases and they are willing to pay more for the same goods leading to decrease in the value of money and increasing the difference between richer and poor.

• Increase  in production prices of certain commodities leading to increase in the cost of the final product leading to cost-push inflation.

• India has a demand-pull effect in the inflation according to which wages increase within an economic system as people will have more money to spend on consumer goods. This increase in liquidity and demand for consumer goods results in an increase in demand for products. As a result of the increased demand, companies will raise prices to the level the consumer will bear in order to balance supply and demand.

• The labour also expects and usually demands more costs/wages to maintain their cost of living giving a boost and further increase in the prices of goods causing inflation in the indian economy.

 Some of the common measures and tools are a follows to control the inflation are-

Inflation is usually controlled by the Central Bank along with governmental policies. 

• Monetary policy – Higher interest rates on the loan taken imposed reduce the demand in the economy, leading to lower economic growth and lower inflation.

• Control of money supply – Money supply and inflation are linked togetger wittherefore controlling money supply can control inflation as people will have less money to spend and the costs of the product decrease altogether.   

•  Supply Increasing– Policies to increase the competitiveness and efficiency of the economy by putting downward pressure on long-term costs of the products 

• Fiscal policy –A higher rate of income tax could reduce spending of people thereby decreasing the demand and inflationary pressures on the people.

• Wage controls – By trying to control wages with the simple formatting of decrease in the paying capacity of people and thereby reducing the demand along with the inflation in the economy.

Inflation is perceived in a very much significant manner depending upon the asset they process accordingly as in India. For someone with investments in real estate or stocked commodity, inflation means that the prices of their assets is set for a hikeand for those who possess cash, they may be abnormally be  affected by inflation as the value of the cash tend to devaluate.