Inflation has been gradually building up for the
last one or two cedes. It is not restricted to a few countries; it is a world
wide phenomenon. Its reasons and cause are so numerous that it is scarcely possible
to write all of them down here in a short essay At most, only a sketchy account
of inflation can he given and that too in relation to Pakistan alone.
In addition to general reasons applicable to all
other countries of the world, there are certain particular reasons also which
added to the inflationary trend in Pakistan. The 1971 War, which paralysed the
economy of Pakistan and brought misery to hundreds of thousands of people, is
one of the major reasons. After this We Pakistan currency had to be devalued
sharply as an initial step towards rebuilding the economy. The 1973 floods in
the Punjabi. And id destroyed crops and property worth corers of rupees and took
uncountable human lives. But this was not all. The sharp hike in oil. Prices
proved to be as disastrous for our economy as the 1971 Way The result was that
the prices of goods short up to a new height, while the balance of payment
reserves dwindled to their lowest ebb.
What is the remedy? It is possible to arrest this
run-away inflation? Well, different economists offer different remedies: few
have proved fruitful. The most common remedy suggested is that the production
of goods must be stepped up so that they could be exported to earn the much
needed foreign exchange. But with the goods being sent abroad, how to check the
prices at home?
Others suggest that the government should decrease
its investment on public works programd. During the period of inflation the
government should raise the rates of both direct and indirect taxes so that the
individual consumer may have less money to spend. Still others recommend that
the wages should not be allowed to increase as this will intensify the effects
of inflation. The government may adopt the policy of allowing the individuals
to have a share of the essential articles at a relatively low price as the
prices of essential commodities are fixed and their distribution is also
arranged at those fixed prices.
Last but not least, the government must introduce
check and balance system. No one should be allowed to overcharge. The prices of
the commodities of daily use must be fixed people should also show the veal
income to the government so that government could plan in a better way.