Why has it become necessary to control price rise ?
Answers
Answer:
It is necessary to control price rise as the intent behind implementing such controls can stem from the desire to maintain affordability of goods even during shortages, and to slow inflation, or, alternatively, to ensure a minimum income for providers of certain goods or to try to achieve a living wage.
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Answer:
It has become necessary to control rise due to its undesirable effects. These are:
1. The value of money and its purchasing power declines. This leads to decline in saving and capital formation.
2. The decline in capital formation has adverse effect on production activity, employment in industries and supply of essential consumer goods.
3. Foreign investment declines as the investment is not profitable.
4. It creates scarcity of essential goods. The government spends available funds on import of essential goods, like food grains.
5. As the production cost increases, the domestic goods become expensive. On the other hand, the imported goods are cheap and their import increases. This creates imbalance in the import-export trade.
6. The lives of the middle class and the lower classes become miserable. Their standard of living deteriorates.
7. It leads to moral degradation. The poor indulge in theft and robbery. The poor women are forced into prostitution. The unscrupulous businessmen indulge in speculation, hoarding, black marketing and profiteering by offering bribes to the corrupt government servants.
8. Price rise is a hindrance to the economic development of the country.
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