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Question:  Increasing Inflation in rural areas has larger consequences in India. Explain.


Answer:  Inflation is a general increase in prices of goods and services in an economy. Inflation reduces the purchasing power of currencies. Inflation in India has reached an eight year high, raising concerns among policy makers.

Consequences of increasing inflation in rural areas

  • Affects food security
    Rural population will be needing to spend more of their income to buy food items. Higher prices may make them unaffordable, causing food insecurity.
  • Less spending on critical services
    Critical services such as education and healthcare will be affected as people will be forced to spend their income on basic needs such as food.
  • Indebtedness
    Poorer sections will be forced to take loans form money lenders in order to survive. They will be burdened under debts for a long time.

Way ahead

Rural population do not have wage revision like people working in organised sector. This will mean that their income will be low and expenditure high.

Thus, rural areas will need greater fiscal support, both in terms of direct income support to revive demand in the economy but also through various subsidies and protection from the rising inflation in input prices.

Tags: GS 3 (Economy)

By- Prashant Tiwari

Updated on 14 May 2022 |   Added on .14 May 2022  |  by admin