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Bring out the major factors influencing inflation in India.
The major factors that influence the Inflation rate in India are: 1. Agricultural price shocks: Agriculture plays a very vital role in Indian economy because of its share in employment and GDP of the nation. Even after significant share in the employment levels and GDP, agriculture in India suffersRead more
The major factors that influence the Inflation rate in India are:
1. Agricultural price shocks: Agriculture plays a very vital role in Indian economy because of its share in employment and GDP of the nation. Even after significant share in the employment levels and GDP, agriculture in India suffers due to monsoon failures, lack of proper irrigation facilities, less size of the holdings, etc. This results in an increase in prices resulting in high inflation levels.
See less2. Government policies: The fiscal and monetary policies adopted by the government also influences the inflation rate in India.
3. Supply side disruptions: Issues in the supply chain management results in a lower availability of goods for production resulting in inflation due to decrease in supply.
4. Demand side factors: High demand as compared to the supply of the good results in inflation as producers would charge higher prices to supply limited goods.
5. Black money: Existence of black money in the economy is another factor affecting inflation as black money leads to high demand.