What are the measures to control Inflation? | UPSC Economics

Inflation is considered a complex situation for an economy. It exceeds a moderate rate that can be disastrous to an economy which is why Inflation is always kept under control. Today we will discuss about some of the important measures to control inflation. 

 Some of the important measures to control inflation are Monetary measures, Fiscal measures, and Administrative measures. Let us have a look at them individually. Monetary measures 

1. Monetary measures or monetary policy is a central bank approach to managing the money supply and interest rates through the use of monetary policy instruments. 

2. The RBI Act, 1934 was implemented in May 2016 to provide a legal foundation for the implantation of the flexible inflation targeting network. 

3. The main goal of the monetary measure is to keep the prices stable within the target band of 2 to 6 percent. 

Fiscal Measures 

1. Fiscal measures of fiscal policy are something in which a country’s government controls the flow of tax revenue and public expenditure in order to navigate the economy. 

2. During a slowdown, the government may decide to spend more on infrastructure projects and other initiatives in order to stimulate the economy. The government also implements a variety of fiscal measures are public expenditure and taxation. 

3. public expenditure is the amount of money that is spent by the country’s government. Example of public expenditure is roads, railways, and housing. Taxation is used to encourage or discourage household competition and private investment by raising or lowering the income tax, corporate tax, or GST. 

Administrative Measures Administrative measures or administrative policies are used by the government to maintain price stability and control inflation price issues in the economy. The other measures included in the administrative measures are direct price controls, restrictions on speculation, and hoarding, a ban on exports, and imports to supplement domestic supply, and a prohibition on commodity futures trading. 

So this is all about the measures to control inflation. It is important to regulate Inflation in a particular manner. It is good for the growth and development of the country.

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