question_answer

Explain any four steps taken by the government to control price rise.                                     [Delhi 2006C, 04]

Or

Describe any three measures taken by the Government to control the price rise.                          [Delhi 2005C]

 

Answer:

(i) Public Distribution System: Government of India under its public distribution system ensures the availability of essential commodities such as wheat rice sugar edible oil and kerosene nil to the consumers at reasonable prices through a network of fair price shops. At present there are about 4.61 lakh of fair price shops in the country. Subsidies are borne by the government.

(ii) Administrative Price Mechanism: Administrative prices are those prices of goods and services which are controlled by the government. Government of India has Imposed price controls on a number of commodities e.g. steel Automobiles etc. Producers of these commodities cannot charge prices higher than the maximum prices fixed by the Government.

(iii) Monetary Policy / Measures: It is the policy of the Central Bank (RBI) to control money supply and credit in economy. This results in people's tendency to consume less which in turn reduces the demand for goods and thereby lower the prices.

(iv) Fiscal Policy / Measures: It is the expenditure and revenue policy of the government to accomplish the desired goals. The intention of the government here is to reduce the money supply which is kept in the hands of the people. When people have less money to spend their consumption will also fall which leads to decline in prices.