Further, to bring more revenue into the tax-net, the government should penalise the tax evaders by imposing heavy fines. Price control and rationing is another measure of direct control to check inflation. The other types of measures are those which aim at increasing aggregate supply and reducing aggregate demand directly. Fiscal measures are highly effective for controlling government expenditure, personal consumption expenditure, and private and public investment. Other Measures.Inflation is caused by the failure of aggregate supply to equal the increase in aggregate demand. They should be supplemented by monetary, non-monetary and non-fiscal measures. If nominal wages increase by 5%, while labor productivity has only increased by 2%, inflation will be around 3%.

As labor productivity increases, wages increase. To increase the supply of goods within the country, the government should reduce import duties and increase export duties. But it is very inconvenient for consumers because it leads to queues, artificial shortages, corruption and black marketing. This will also put a check on private expenditure which is dependent upon government demand for goods and services. When shortages happen, the quality of production decreases and black market operations increase. Wages are positively related to labor productivity. Therefore, the best course is to link increase in wages to increase in productivity. should be provided to different consumer goods sectors to increase production.
It should also introduce compulsory provident fund, provident fund-cum-pension schemes, etc. This will tend to reduce disposable income with the people, and hence personal consumption expenditure. Inflation may be the result of rising cost of production. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.Much cheaper & more effective than TES or the Guardian. Instead, the government should borrow more to reduce money supply with the public.

(a) To Increase Production: The following measures should be adopted to increase production: (i) One of the foremost measures to control inflation is to increase the production of essential consumer goods like food, clothing, kerosene oil, sugar, vegetable oils, etc. Another measure is to increase savings on the part of the people. Inflation can, therefore, be controlled by increasing the supplies of goods and services and reducing money incomes in order to control aggregate demand. To cut personal consumption expenditure, the rates of personal, corporate and commodity taxes should be raised and even new taxes should be levied, but the rates of taxes should not be so high as to discourage saving, investment and production. Monetary policy may not be effective in controlling inflation, if inflation is due to cost-push factors.
At the same time, it should stop repayment of public debt and postpone it to some future date till inflationary pressures are controlled within the economy. This will have a dual effect. (i) One of the foremost measures to control inflation is to increase the production of essential consumer goods like food, clothing, kerosene oil, sugar, vegetable oils, etc. You're now subscribed to receive email updates! They are the maximum prices fixed by law and anybody charging more than these prices is punished by law.

It is applied to essential consumer goods such as wheat, rice, sugar, kerosene oil, etc. It means collecting more in revenues and spending less. Using price controls to stop or control inflation means that shortages are created. Normally this cost-push is associated with wage-cost as the trade unionists claim for excessive increase in wages. Though this measure is always welcome but it becomes difficult to distinguish between essential and non-essential expenditure.

Rather, the tax system should provide larger incentives to those who save, invest and produce more. Supply side policies seek to increase productivity, competition and innovation – all of which can maintain lower prices. Keynes, therefore, advocated compulsory savings or what he called ‘deferred payment’ where the saver gets his money back after some years. Another important measure is to adopt a rational wage and income policy. For this purpose, the government should float public loans carrying high rates of interest, start saving schemes with prize money, or lottery for long periods, etc. Inflation control depends on the current economic condition the country is in.

Such a measures is usually adopted when there is abundance of black money in the country. (ii) If there is need, raw materials for such products may be imported on preferential basis to increase the production of essential commodities, (iii) Efforts should also be made to increase productivity.

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