English Essay on “Inflation” Complete Essay, Paragraph, Speech for Class 10, Class 12 and Graduation and other classes.

Inflation

There may be many people even in the modern world who have never heard of inflation; but certainly not many among them have been able to keep clear of its influence. Economists see it or sense it in government policies and programmes and consider it with dispassionate neutrality. For them, inflation is yet another parameter of their hugely complex ‘situation models’, which they use to study the mechanics of money. Inflation to an economist, like any other phenomenon which affects money transactions, can be a blessing and a curse; sometimes, however, it is both, simultaneously. It is possible that one might never get anywhere, trying to interpret inflation from an economist’s point of view. If one attempts to do so one will end up contradicting oneself sooner than later!

Though not to such an extent as for economists, inflation has a modest ambiguity and mystic about it in the case of the common man also. For him, inflation is more pronounced and definite as an evil and a sign of despair and hopelessness. To the two things considered certainties in life–death and taxes-one may add a modern member, inflation. Generally, inflation to the common man is the painful punch in the underbelly if he consumes too many of the fruits of prosperity. It is also like the sickness in his stomach, which forces him to give up the goodies on the dining table! Therefore, whatever the state of affairs and of the times in which one lives, inflation is certain to have an effect on one’s life.

In times of prosperity, when people tend to buy or consume more, a demand for the products they consume is created. If such an increase in demand is not matched by the supply of those products, the prices of the products are bound to increase; a possibility which leads to inflation. On the other hand, in times of depression, people naturally have less money to meet their needs, making those needs expensive and, hence, unrealizable. It is, therefore, clear that, rather than try to eliminate inflation altogether, it is easier and wiser to keep inflation in check. In a way, inflation is the inconvenient consequence of one of man’s most ingenuous creations – money; something for which man can take almost exclusive credit. But unlike God’s creations, like land, water, air, trees and minerals, the worth and value of which are always increasing; the value of money is almost always declining a phenomenon that shows man off as a poor creator! Like in the case of taxes, the government, as the benefactor and protector of society, has considerable concern for the phenomenon of inflation. Matching its propensity to tax, is the government’s paranoia for high inflation. Some governments go to the extent of relating tax to inflation: they tax more to keep inflation rates down. But all of them, by a mixture of ingenious innovations and well-schemed sleights of hand in money management, have confused and complicated the mechanics of inflation.

The common man comes face to face with inflation when he experiences price rise. If he is able to live reasonably, comfortably, with one hundred rupees today, he might need one hundred and ten rupees to maintain the same standard of living next year. In other words, the. worth, or the purchasing power of the money he has now, will be reduced next year. This increase in the cost of living, and the related decline in the worth of money, constitutes inflation for the common man. This should also mean, quite logically, inflation for everyone, including those in the government. But the government, by talking of inflation as a rate or a percentage, has conceived a facility to ward off criticism about rise in the cost of living. To keep inflation down, the government need only ensure that the ‘rate’ at which living costs increase is reduced, it need not necessarily reduce the living costs as such. Put differently, a lowering of inflation only indicates that the prices are increasing at a lesser rate than before; not that the prices are actually declining.

By depending on devices like subsidies and taxation, and by introducing concepts like the whole-sale price index, government policymakers have successfully delinked inflation from price rise, lest the two should gang up to mess up government prestige and reputation. The delinking has been so successful, that, for the reason mentioned earlier, we often notice the unpalatable, though not unnatural phenomenon of prices rising, despite the drop in inflation rate! By this remarkable ploy, the government is able to claim success in one aspect of the economy, while concealing failure in another.

Inflation does not restrict its presence between the people and the market place alone. It spreads its tentacles to other parameters of the economy, like productivity and employment. A drop in demand for products will stall productivity, and consequently, depress the prospects of employment.

In India, apart from adopting conventional solutions, like raising interest rates and taxes, which help reduce deficits and regulate money supply, governments generally do nothing to check inflation. By maintaining the status quo and by postponing unpleasant decision-taking, the government creates a pseudo scenario of stability and balance. This practice may be adequate and effective in the short term, but never eternally reliable. Sooner than later, the ramshackle supports of stability will exhaust themselves and yield hopelessly.

The more complex our lifestyles become, and the greater preference we have for variety and ostentation in them, the more entrenched and inevitable will inflation be in the economy. Inflation is very much the ‘Frankenstein monster’ that man created unintentionally, while seeking convenience in the form of money transactions. In a way, it is the price we have to pay for that convenience.