Measures To Control Inflation.Inflation is a highly controversial term, which has undergone modifications since the neo-classical economists first defined it. In the words of Friedman, “Inflation is always and everywhere as monetary phenomenon and can be produced only by a more rapid increase in the quantity of money than outpuf.But some economists do not agree that money supply alone is the cause of inflation.
(i) Inflation is a rise in price level after the full employment has been achieved”.“Inflation is nothing more than a sharp upward movement in the price level”.
15 Measures To Control Inflation.The following are the remedies or measures for removing inflation.
- Restriction on the Import of Luxury Items:
The import of luxury items must be restricted. It will protect from mh i national inflation and will be favourable for the balance of payments.
- Cut on Expenditure:
There should be a cut on the non-productive expenditure not only government but also by the people.
Nationalized industries should be denationalized and private sector hould be allowed to play its role more effectively.
- Change in Taxation System:
The taxation system should be revised in order to encourage the pnvatc sector by giving tax concession or rebate or by charging low rate of tex axes on consumer goods.
- Sick Industries Problems:
Sick industries should be handed over to private sector to promote I heir efficiency or productivity.
Market mechanism should be allowed to function and there should be no fixation of prices.
- Check on Unplanned Cities:
The unplanned and unregulated growth of cities should be chef which would put a check on inflat’on.
- Effective Administration:
The administration should be made effective and alert to increase the output of the country.
- X Discipline:
Discipline should be restored in factories and offices to improve the efficiency and output of the country.
- Coordination Between Monetary and Fiscal Policy:
Government should coordinate the monetary and fiscal policy in such a manner that it could check the inflation.
- Increase in Production:
The total goods and services in the country should be increased so that the supply of money may be equal to the supply of goods in the country., / 1
- Price Control:
The prices of the commodities in the country should be controlled so that there may be equilibrium between supply of goods and supply of money in the country.
- Control on Supply of Money:
The Central bank in the country should control the supply of money in the country by adopting tight monetary policy.
- Increase in Investment:
The public and private investment in the country should be increased so that the supply of goods is equal to the demand of good in the country. Then inflation may be removed.
- Check Against Hoarding and Smuggling:
The monetary punishment should be given to those persons who are involved in hoarding and smuggling of goods. So, the artificial shortage of commodities may be controlled and inflation can be removed.