1 paisa .
1 rupee (100 paisa).
100 rupees.
1000 rupees.
1 lakh rupees (100 thousand rupees).
1 crore rupees (100 lakh rupees).
This is the hierarchy of the Indian rupee.
50 years ago 1 paisa would have bought you a candy. You could have a day’s food in 1 rupee.
Fast forward 50 years and you will not see the existence of a paisa. Even a small candy will cost you a couple rupees at the least. And a day’s food will be at least a couple hundred rupees.
So what what drove the prices by a better part of 200 times?
Its Inflation – the holy grain of modern economics (sort of).
Holy grain? Really? Price hike isn’t supposed to be a good thing right?
Well, sure but our governments strive for inflation. Why? Because Inflation is a way of showing growth. Economies of countries like India & China look for an inflation of 8-10% since last 5 years. In better words, the cost of every thing nearly doubles every 8 years. This rate attracts foreign businesses in the country in turn flourishing the countries economy.
Is that the only good thing that comes with inflation? Or are there any other reasons to consider?
Yes, there is. Recession is worse than Inflation as Inflation can be control by undertaking monetary and fiscal measures (will be mentioned in depth in further reads), dealing with recession is completely another animal.
Why so?
With Recession comes a decline in the economy. Foreign businesses prefer to take their money out of the country making many people jobless, blocking funds for government projects. Well, these are just the initials, further into a recession people start falling short of money in hand, riots take place and things get worse for all sectors. The thing to know is it is bad.
But doesn’t massive price hikes widen the gates to poverty?
Does high Inflation rate actually means high growth for people?
These and more questions will be answered in the next blog. So, stay tuned.
I hope you liked the read, in case you didn’t I am sorry but there is no dislike button, you can always use comments though.
By Bhavik Gandhi December 15, 2019
Easy Economics 
This is a great blog and as always I loved reading it. A question definitely triggered my thought that India is a country where inflation seems to be recession as the people are always struggling for job and source of money. Why so? Why is inflation not making a great difference to a country like India ( whenever it occurs). Example to be taken was the demonetisation which took place in India during Modi was elected which removed almost 80-90% of India’s currency. Still people are facing poverty. Why so?
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I hope the next blog will clear this n all the other doubts related to inflation. Thanks a lot for reading.
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