Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ACCOUNTING STANDARDS :: VAT Audit :: list of goods taxed at 4% :: form 3cd :: cpt :: Central Excise rule to resale the machines to a new company :: TDS :: empanelment :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4%
« News Headlines »
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016
 Announcement - Clarifications in Respect of MEF 2016-17
 Non-taxing GST apps to make filing income tax return less painful

inflation is also a form of taxation
February, 14th 2009

How to finance rural development? Some economists have suggested that the simplest way to finance development in developing countries is to print money or borrow from the banking system; in short, by deficit financing or controlled inflation, writes Katar Singh in Rural Development: Principles, policies and management,  third edition (

But, inflation is also a form of taxation, the author argues. It is really a tax on cash balances, since those individuals and organisations in the economy who hold cash balances see their purchasing power eroded by inflation, he adds.

There is, thus, a transfer of wealth from those who hold money in the form of cash balances to those who obtain the resources (in this case the government) through money creation. The government borrows heavily to finance spending, including that for rural development.

Singh rues that inflation tax which can be a politically easier way of taxing people than direct taxes affects hundreds of millions of people, though very few realise the same. Most people value their investment and income without adjusting it for inflation. This is what is called money illusion in economics.He reasons that inflationary (deficit) financing of the regular budget in the hope that a rising price level will in itself provide incentive for private investment in development projects is unlikely to be successful.

However, if the government undertakes a large-scale development programme, recognising that the level of deficit financing is in itself inflationary and mops up increases in income through tax policy, monetary policy and direct controls, then mild inflation can have a positive impact on economic development.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Development Software Programming Software Engineering Custom Software Development Requirement Based Software Development Software Solutions Software Serv

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions