ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Policy on Administered Prices and Deficit Financing

This paper argues that the suggestion that the indirect effects of changes in administered prices on inflation would be offset by the deflationary impact of additional revenue is seriously misleading. The authors also refute the contention that the budget deficit route is more harmful than the once-for-all adjustment in raising administered prices. Finally, the compelling need for taking co-ordinated decisions relating to capacity utilisation, new investment and cost-based pricing across the set of interdependent public sector industries/enterprises is highlighted.

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