Rising Prices Essay Outlines:
- Introduction. Persistently rising prices are symptomatic of an ailing economy. They cause great hardship to the masses.
- The nature of inflation. Inflation is a self-accelerating process,
- The ill-effects of rising prices. (a) Fixed-income HD groups suffer the most. (b) investment is diverted to non-productive assets. (c) Exports get a setback,
- The causes of inflation. (a) Wrong planning; (b) deficit financing; (c) unsound taxation; (d) black money; (e) smuggling; (f) lack of consumer resistance; (g) steep rise in population; (h) slow increase in agricultural and industrial production; (i) faulty distribution and marketing system; (j) increase in the price of oil in the international market.
- Steps to check rising prices. The government has already initiated some steps, but they should be strictly imposed. Major steps are: (a) accelerating production; (b) curbs on money supply; (c) effective distribution system; (d) public support to keep an eye on erring businessmen; (e) social awareness; (f) a suitable policy for the control of the population. Rising prices are causing great concern to Pakistani economists at the present moment. It is true that prices can never remain stationary. A certain amount of fluctuation is inherent in the very nature of prices. In a developing economy, they usually display an upward trend. But if prices keep rising persistently, they cause great hardship to the people. They spare neither the rich nor the poor, neither the producer nor the consumer. They make economic activities uncertain and unstable, causing great unrest in the minds of the people.
Rising Prices Essay with Outlines and Quotations
Inflation is a self-accelerating process. It is a phenomenon that feeds on itself and initiates a very vicious cycle. Rising prices drive people to demand increased wages and salaries. Since such demands are resisted in the beginning, they resort to pressure tactics like strikes and demonstrations.
But such tactics only decrease production and aggravate the situation. And if the demands are met, there is a fresh spurt in prices. All benefits accruing from additional income are neutralized. Then fresh demands are raised and this cycle goes on. Fixed-income groups like salaried people, wage-earners, and pensioners are the most helpless victims of inflation. As prices rise, their real income gets eroded. The additional dearness allowance which the government sanctions from time to time proves of no use to them because their purchasing power actually goes down. Inflation induces businessmen to invest their money in non-productive assets like gold and land whose real worth is not affected by rising prices. High prices also adversely affect the exports of the country and distort the balance of foreign trade.
Numerous factors can be cited to explain the price rise in Pakistan. First, our economic planning has suffered from serious drawbacks right from the beginning. During the various Five-years plans, while the public expenditure persistently increased, the production targets were never realized. This forced the Government to resort to deficit financing. There was a rapid increase in the money supply without a corresponding increase in production. The resulting imbalance inevitably led to inflation. The taxation policy of the government has also contributed to the price rise. A sound policy of direct taxes would not only have yielded higher revenue but also have enabled the government to give relief in indirect taxes, which invariably leads to inflation. The defective tax structure has encouraged tax evasion and led to the accumulation of black money. This is an example of evil multiplying evil. The parallel economy in our country that thrives on black money and smuggling has always encouraged a rise in prices. Slow increase in agricultural and industrial production, faulty distribution and marketing system, and an unprecedented hike in oil prices in the international market can be cited as some other important factors that have aggravated the situation.
Our agriculture has been rather slow to respond to innovations. The industry has been faced with a shortage of inputs like coal, power, and raw materials. But even the things produced are not properly distributed, the majority of Pakistanis have no community consciousness. There is no organized consumer resistance to price rise. Instead, our masses get scared by the rumors of scarcities and tend to hoard as much as they can. This further intensifies the crisis. Pakistanis also believe in ostentatious living. They indulge in wasteful expenditure that directly affects the prices.
Our government is quite conscious of the magnitude and implications of the problem. It has already initiated a number of steps to check inflationary tendencies. What we now need is strict enforcement of these steps. Apart from accelerating growth and imposing curbs on the money supply, we need an effective distribution system. We also need the support of social workers and other public-minded citizens to keep a watch on the unethical practices of shopkeepers. But nothing can mitigate the situation unless the growth of our population is checked.
Related topics 1. The problem of inflation; 2. The Price Spiral; 3. Ways and Means of Combating Inflation; 4. Current Inflationary Trend and Remedial Measures (Symptomatic – indicative; Self-accelerating – increasing its own speed; Fluctuation – rise and fall; Inherent – natural; Initiate – to begin; Vicious – harmful; Spurt – sudden rise; accrue from – to rise from; Erode – to reduce by degrees; Unprecedented – without a previous parallel; Aggravated – to intensify; Innovations – changes; Ostentatious – full of show-off; Unethical – immoral; Mitigate – to lessen the seriousness)
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