Inflation revisited: a confusing chapter from Economics and it’s remedies

Hello everyone, today we discuss modern India’s Economic crunch with the reference of inflation. The Financial shift in India’s Gross Domestic Product(GDP) as claimed by the white collar babus, burning several liters of fuel in age-old Ambassadors mostly confuses us rather than settling us with a straight answer. The fact remains, India is a growing economy even though the time required for India to make decisions are long enough for toddlers to step into college. The ultimate questions, “Slow but steady, How is India growing?” is to some extent answered in Rama Bijapurkar’s ‘We are like that only’.

Let us start with an example, You earn an Income which is then divided in two segments: Savings(s) or investments(I) and Expenditure(e) or consumption(c).Hence considering the Income(y) for Government, it would be a submission of the entire Savings and Consumption of the country. Therefore y = s + c, However there is some editing to this equation. The money that is saved in Banks, or invested in shares and stocks or any other mode is then invested by Banks, Government or some other body in other programs. This Investments are mostly loaned to industries for increasing the production of Finished goods and there is an increases in consumption. Hence with increase in Savings(s), consumption(c) increases as well.

The GDP which is defined as the total production of goods and service produced in the country for that year is affected tremendously every year. Moreover, Imports and exports play an important role in shaping the country’s GDP. The anti-social elements like Corruption and Bribery cause a leakage in the income and saving structure of the country. Based on the amount collected in the Government’s kitty, which is the RBI- Reserve Bank of India, the Government further plans the Fiscal and monetary policies for the country.

Inflation: The traditional definition states that when Income of the country grows eventually with the growth in the prices of the commodities, steadily over a period of time is known as Inflation. However when the prices increases and income is unchanged or commodities price remain the same with fall in income causes commotion in the masses. This economic rift created is major reasons for erosion in the purchasing power of money. The unemployment increases due to cost cutting and again the GDP decreases.

To tackle such a brouhaha, simple steps maintain your economic standards even when the market is unstable.

Investment in Gold: It is observed that the day you plan to make an investment in gold, it is the cheapest that day. Buy gold when the market is facing a lull as the price of gold has never seen a steep slope but always has been on an upward swing.

Secure investments in the Growing Sectors: Plan a to-do list for investment and consult an expert. The low risk companies in growing sector in recent times for example Pharmaceutical or telecommunications or etc. are secure to invest with options like mutual funds or stock options.

The Growth plans by Banks may also fall in this secure category however the returns are not high.