The Menace of Inflation

By N. DANDEKER, I.C.S. (Retd.)

Summary

In this Forum of Free Enterprise booklet, based on a speech delivered in Bangalore on 2 July 1960, N. Dandeker (a retired Indian Civil Service officer) sets out to educate the lay public about inflation: what it is, how long it lasts, why it is harmful, and what should be done about it. He defines inflation as a steadily rising level of prices caused by money supplies growing faster than the real requirements of the economy, and insists the phenomenon is best understood by ordinary citizens so that an informed public opinion can pressure the Government to act.

Marshalling price data, Dandeker argues that India had been undergoing a steady, persistent state of monetary inflation over the preceding four years: the general price level in February 1960 stood about 30 per cent above 1955-56, with foodgrain prices up 37 per cent and the cost of living roughly 40 per cent higher. He dismisses official attempts to blame profiteering, black-marketing, and inadequate production as cliches, locating the true cause in excessive money supply driven by deficit financing and over-ambitious Five-Year Plans pursued beyond the country’s real resources.

The booklet then traces inflation’s damage: it erodes the real worth of savings, insurance, provident funds and government securities, penalises lenders and fixed-income holders, distorts industrial investment toward uncontrolled high-return sectors, and undermines both the ability and the willingness to save. Dandeker contends that the cure lies in stopping deficit financing and curbing unproductive expenditure rather than warring on symptoms, and closes with a call for the common man to mobilise public opinion against the ‘menace.’ The rendered pages span essentially the whole booklet.

Key points

• Inflation is defined as a steady, persistent rise in prices caused by money supply growing faster than the economy’s real requirements.

• Dandeker argues the public must understand inflation so informed public opinion can force the Government to act.

• Price data cited: general price level in Feb 1960 about 30% above 1955-56; foodgrain prices up 37%; cost of living roughly 40% higher.

• He rejects official explanations (profiteering, black-marketing, inadequate production) as cliches masking the real cause.

• The root cause is identified as excessive money supply driven by deficit financing and over-ambitious Five-Year Plans.

• Inflation erodes savings, insurance, provident funds and fixed-income investments, penalising lenders and savers.

• The proposed remedy is to stop deficit financing and curb unproductive expenditure, not to war on symptoms.

• The work closes by urging the common man to mobilise public opinion against inflation.

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