What are the structural factors behind the problem of inflation in our country?

By inflation mean a process of rising prices. A situation is described as inflationary when either the prices or the supply of money are rising,

 but in practice both will rise together. In the Keynesian sense True inflation begins when the elasticity of supply of output in response to increase in money supply has fallen to zero or when output is unresponsive to changes in money supply. If there is full employment then condition will of clearly inflationary, if there is increase in the Money SupplyDepending upon the reason of inflation, it can be divided in many types as

(1) Demand-Pull inflation: This represents a situation where there is increase in Aggregate Demand for resources either from the government or the entrepreneurs or the households. Result of this is that the pressure of Demand can’t be met by the currently available Aggregate Supply which result in Aggregate Demand > Aggregate Supply which is bound to generate inflationary pressure in the economy.

(2) Cost-Push inflation: This represents the condition where even though there is no increase in Aggregate Demand, prices may still rise. This may happen if the costs of especially wage cost rise.

(3) Structural inflation: This type of inflation occurs because of change in structure of economies as happened in India from Agricultural Structure.

It attributes the inflation to the demand side effects of high growth. If people are richer because of an 8-9 percent growth rate they are bound to demand more. Since supply does not adjust, prices are bound to rise .Besides there are other structural factors also, as the tendency where corporate consolidation in production and trade decontrol that permits profiteering, a reduced role for public agencies and public sector firms and the withdrawal of subsidies on a range of inputs have pushed up costs and prices.

The other one is the role that speculations has to play what with liberalized trade , the presence of large corporate players in the wholesale and retail trade, and the growing role of futures and derivatives trading in a host of commodities.