MEASURES TO CONTROL INFLATION IN INDIA

1] Monetary Measures

The government will use a variety of calculations and measures to control the inflation rate.
Monetary measures are one of the most popular and frequently applied methods to achieve this.
Here, the government makes an effort to regulate the flow of credit and money into the economy
with the assistance of the Reserve Bank of India. A good strategy to hold inflation in line in the
economy is to manage market liquidity levels. Some of the steps the government may take to
check inflation are as follows,

● raising the bank rate The cost of loans and advances goes up for the general public as a
result. This will result in them spending less money on goods and commodities.
● Utilize additional open market transactions to lessen the amount of liquidity in the
economy.
● As a tool to manage the availability of credit and money in the market, the RBI also
modifies its Cash Reserve Ratio.

2] Fiscal Measures

The government's fiscal policies are another measure to control inflation. These monetary
controls on inflation primarily consist of two parts. The first is a decrease in consumer spending
and the second is a decrease in government spending or expenditure.

If government spending is the primary cause of demand-pull inflation, it can be controlled by

cutting back on public expenditures. The best strategy to control inflation in circumstances when
demand rises as a result of an increase in private expenditure is to tax profits. Private income is
taxed, which reduces both consumer spending and the relevant disposable income. As a result,
the overall demand is decreased.

Both of these actions could be implemented simultaneously by the government to control

inflation in the case of an extremely high persistent inflation rate.

3] Price Control
Pricing restraints are another more method for reducing inflation. So, during periods of fast-
rising inflation, the government may simply stop any further rise in commodity prices.
Therefore, rising prices are temporarily restrained. This is not, however, a long-term fix.
Therefore, long-term price regulation cannot, by itself, regulate the rate of inflation in an
economy. It is effective as a short-term solution. similar to how price restrictions were
implemented by the government.