Numerous factors can be cited to explain price rise.
Firstly, our economic planning could not achieve targeted production
while public expenditure increased manifold. Deficit financing was
adopted. Paper money in abundance and paucity of goods led to inflation.
Secondly, defective tax regime has encouraged tax evasion and increased
black money. The parallel economy encourages rise in prices.Thirdly, more
mouths but scarce goods give opportunities to the trading community to
sell their articles to the highest bidder. Moreover, black - marketers
and profiteers create artificial scarcity to push up prices.
Fourthly, unprecedented hike in oil prices has aggravated the situation.
Transportation has become costly and this influences overall price
structures and makes price rise inevitable.
Fifthly, slow
increase in agricultural and industrial production and faulty
distribution has further tilted the balance of demand and supply. Heavy
demands have pushed up prices to new heights. No way out.
Sixthly, people get scared by the rumors of scarcities and start
hoarding as much as they can and this leads to real scarcities of
essential goods. Prices shoot up.
Seventhly, Multinational Corporation are also responsible for this malady. They
sell their branded goods at exorbitant price and getting a clue our
domestic manufacturers too increase the prices of their products.
Take a simple example we used to get potato chips at the rate of Rs 80
per kilo. Came the MNCs and they started selling their potato chips at
the rate of Rs.300 per kilo and their Pakistani brethren too increased
the prices. These MNCs did something more. They took over many domestic
productions and arbitrarily increased prices.