Ojaank IAS Academy

OJAANK IAS ACADEMY

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OJAANK IAS ACADEMY

Inflation arising out of international crisis and measures for relief from it

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The wholesale inflation rate in India has remained at the double digit level. Reaching a nine-year high, its figure has now reached 15.1 percent. One of the main reasons for this is the ever-increasing demand of the world in comparison to the supply. Now looking for the reasons for this reduction in supply, then at its root is the Kovid crisis that came two years ago and the reason for its increase in recent times is the Russia-Ukraine war.

In order to normalize the high level of inflation, the Government of India has decided to reduce the excise duty on petrol and diesel. With this decision, not only will the public spend on fuel, but the movement of goods i.e. their transportation will also be cheaper. It will also help in reducing the cost of various products and services.

The government had also imposed an immediate ban on the export of wheat so that it would not increase the price of wheat in the domestic market and it would not be taxed on the urban middle class. If we talk about setting inflation targets in India, then the inflation target in India has been kept around 6 percent. The same figure for America is only two percent. However, the rate of inflation in America has reached a level of 8.3 percent. Inflation remains high in Europe as well.

If we look at it from this point of view, then the whole world has become lighter due to inflation. Since Russia-Ukraine is a major producer of wheat. In addition, Ukraine is a major producer of sunflower oil. Due to the disruption of supply from here, it has affected the whole world. Now there is not only a crisis of edible oils in the world but there is also a food crisis. With the rise in the price of crude oil, the price of goods increases because it makes the transportation of goods expensive.

Since India is still heavily dependent on imports. So imported inflation affects India a lot. In the pre-Kovid situation in India, where the ratio of imported inflation was 28 to 30 percent, now this figure has increased to percent. Apart from this, the supply of products exported by China such as indigenous computer hardware, consumer durables and telecom equipment has also been affected. Now China is exporting them in very small quantities.

If we have to overcome this imported inflation crisis, then we have to first emphasize on manufacturing these products in India itself. Along with this, India will have to focus on alternatives to conventional fuel. India has also started working in this direction. The way India is emphasizing on the development of hydrogen fuel, India will not only become self-reliant in this field, but India will also become a hydrogen exporter. Semiconductors are used in all electronic devices today. India has taken substantial steps towards becoming a semiconductor hub. Other countries are also being resorted to for its development through Semicon Diplomacy. But this is a long-term solution to deal with inflation.

If there is some immediate solution to this, then it is that India also has to bring more rationality in food distribution. For example, in addition to wheat, other grains will also have to be included in various government food distribution schemes. Rice, coarse cereals and pulses can be substituted for this. This will enable farmers to export wheat to foreign markets. This will also increase the income of the farmers. For this, the measures that India has started to become self-reliant in the manufacturing sector, the results are also slowly coming.

In this way, India will have to implement long-term co-terminous plans to deal with inflation. India will have to prepare the plans made to deal with inflation in the present time in such a way that it can be integrated with the action plans being made for this purpose in the long run.


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