India’s money illusion problem4 min read . Updated: 21 Jun 2017, 03:13 AM IST
The recent drop in India's inflation provides an excellent opportunity to think more clearly on the old problem of nominal versus real variables in an economy
The recent farmer protests in some parts of the country throw fresh light on an old economic problem. People think in nominal rather than real terms. Price changes matter. The paradox of farmer protests when farm output is at record levels is less puzzling once we take falling food prices into account. It is the nominal rather than the real trend that is hurting farmers. It is useful to remember that two of the biggest movements launched by M.K. Gandhi were timed with the deflation in farm prices after World War I and the Great Depression across the world.
Select your Category