PRICE HIKE IN INDIA

Price Hike

Price hike means that a percent increase in the cost of goods and services. It is regulated by the finance department of the government of India. It is a 10% price hike, means the cost of that particular item has increased by 10%. Also called price increase.

Cause of price hike

With regard to the factors contributing to the rise in the general price-level, one may mention that on the demand side the following factors have operated:

1: rapid growth of population in the country

The population of India as per 2011 census was 1,210,854,977. India added 181.5 million to its population since 2001, slightly lower than the population of Brazil. India, with 2.4% of the world's surface area, accounts for 17.5% of its population.

2:increase in capital or stocked money among the people

Increase in the incomes of a sizeable part of the population added to the demand for goods. The process, unaccompanied by a corresponding increase in consumer goods raised the price level.

3: rising non-development expenditure of the government

Deficit spending increases the money supply in the hands of people and if not accompanied by increase in the supply of consumer goods, it results in raising the price levels.

4: increase in money supply or debt provided by the bank

An increase which exceeds the genuine expanding needs of the community leads to higher monetization of the needs such as transactions. This is another way of saying that prices are at higher levels. In the nineties, a rapid accumulation of foreign exchange assets had also caused the expansion of money supply.

5:inadequate agricultural output

There is an inadequacy  in the agricultural products to met the large amount of the population.

Note:  

There was a theory of increasing of prices of goods by the Government of India is that due to covid-19 the capital in the treasury of the government decreased because during the period of covid-19 all the works are stopped and there is no tax collection so that the government takes several action for adding capital to the governments' treasury like the increasing the tax in several goods because of which there is an increment in there prices like increase in the prices of petroleum, electronic items, etc.