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May 3, 2008

High inflation big concern for India

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--By P. Neelakantha Achary
What could be worse than rising prices for the people of India? The household budget of every family in the nation has been running out of the track, let alone the pain of middle class. This is also toughest situation for the government and Reserve Bank of India to bring down the inflation rate under control; moreover it’s not a simple task. Probably, people of the nation might experiment the substitution effect in their day-to-day life.
At this juncture, people prefer to buy cheap vegetables than deader or just they may change their order of preference. These are seem to be assumptions of a theory in economics but you can find in real too no need to refer any economics text book, just ask a laymen he can narrate the substitution effect or order of preferences.

The inflation is not only hitting headlines everyday, but it is also become popular as ‘Ghar Ghar Ki Kahani’, a popular daily soap in India. People might count their money number to times after marketing their daily needs. The story does not end there, no matter your higher salaried or wage earner, you need to contribute the same price in the market. So, there is no proportional sort of system in the market, there everybody pays the same, despite their stature and income. People including – you and me, might have same question in mind, when the prices will go down, or the inflation – will drop to 4 or 5 from the highest 7.5 per cent. However, if you want to calm yourself then just listen to bytes of finance minister, financial experts, etc., or just read articles about inflation, like this one.


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