Print Friendly, PDF & Email

Distinguish between demand pull and cost push inflation. Examine the factors that are causing inflation in India. What measures are needed to keep inflation under check?

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

4. Distinguish between demand pull and cost push inflation. Examine the factors that are causing inflation in India. What measures are needed to keep inflation under check? (250 words)

Difficulty level: Moderate

Reference: The Hindu

Why the question:

The recent action of the Reserve Bank of India (RBI) to raise the repo rate by 40 basis points and cash reserve ratio (CRR) by 50 basis points is a recognition of the serious situation with respect to inflation in our country and the resolve to tackle inflation.

Key Demand of the question:

To write about the differences between demand pull and cost push inflation and the factors causing inflation in India off late and measures needed to keep it under control.

Directive word: 

Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

Structure of the answer:

Introduction: 

Begin by defining inflation.

Body:

First, in detail bring the comparison between demand pull and cost push inflation. Nature, factors causing it, effects etc.

Next, write about the reasons for increasing trends of inflation in India off late and its impact.

Next, suggest steps to overcome the same.

Conclusion:

Conclude by writing a way forward.