Inflation - An English Essay

Inflation

By Sir Khalid Khan (Anees Hussain)

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INFLATION

Special Thanks To Aلi Sheiخ

Inflation is one of the major problems of the world. It is an economic term. It means any increase in the supply of money. Coulborns defined inflation as "a case of too much money chasing too few goods". Inflation occurs when the central bank expands the money supply or money in circulation. If there is no increase in the production of goods and service, expansion of the money supply raises the general level of prices. In other words inflation can be described as a fall in the purchasing power of money. So in ordinary speech, inflation is often taken to mean high prices.

There may be many causes of inflation. First of all, faulty economic policy of the Government is one of the major causes. Sometime, to meet the deficit in budget the Government issues more currency. The supply of money in circulation increases but the supply of services and goods remains the same. This results in price like. Secondly, prices of different things go up, if their supply becomes less because of strikes of workers, closure of factories, floods, absence of rainfalls etc.

Another cause of inflation is the general rise in the standards of living of the people. As the people start living a better life, with an increase in their incomes, they need more clothes, shoes, and other things of daily use.

Money used for unproductive purposes, such as for buildings, cinemas, hotels, etc. also gives rise to inflation. Such money spent is wasted, and it has no share in the development efforts.

The war is another cause of inflation. For example, Pakistan was making progress by leaps and bounds before Indo-Pak war in 1965. After that war the economy of Pakistan was badly affected and as a result it found no other way except to devalue its currency to rebuild the economy.

International circumstances also affect the economy of a country. When the prices of different things like petrol, oil or machines are increased, then the country that imports these things is compelled to increase prices.

Natural calamities, overpopulation, political instability and foreign remittances can also cause inflation.

To get rid of this problem, following steps should be taken. Rapid industrialization will remove the dark clouds of inflation. In rural areas, small scale industries should be set up. More credit facilities should be provided to the farmers and owners of small scale industries, so that they can increase production to meet growing needs of the population. The government should make effective plans to increase the investment for productive purpose. Government should adopt strict and tight monetary policy as a preliminary step to contro1 inflation. Family planning should he popularized to discourage the birth rate and to reduce the population. During the period of inflation the government should raise the rates of direct and indirect taxes, so that the individual consumer may have less money to spendd. It is also necessary to study all the causes of inflation and these cause should be removed.