I suppose some sort of short term measures were required. It is in line with what some other countries have already done.
But in the medium and long term, any time regulations are imposed, there will be lots of people out to make a quick buck.
Market economy works best when it is left alone to do its thing, with a little bit of tweaking to ensure that the rich nations do not take the poor for a ride.
On the other hand, unnecessary interference for any reason leads to trouble. A classic example is our Gandhian prohibition policy. A lot of bootleggers made serious money in those days.
How can we make growing food more interesting for the farmers? That is the key question.
RE:Regulations will lead to more problems
by subish achamparambil on Apr 01, 2008 09:23 AM Permalink
Mr: ABK... Just for the matter of commenting please dont comment!!
By the same Logic Bear Stearns and other struggling US financial institution should have been left alone instead of US fed bailing them out. Had the same thing happened in India or in other emerging economies, India would have got lecture from western nations that how let the bad banks fail is good thing in the long run.
The steps announced by Govt to combat inflation such as ban on export of rice and pulses and zero duty on import of crude palm and soya oil. It also advise to restrict the commodities in Essential commodities Act. These measures are small although welcomed.What is essential how the transport of these essential goods would be made cheaper.It could be done only when the petroleum products are made cheaper or else subsidise the transport.The prices and steel must be frozen atleast for one year or else they should be brought under Essential Commodities Act and sold through fair price shops at cheaper rates as is being done in Tamilnadu where cement is sold through civil supplies godown at subsidised rates. Such measures alone will have a soothing effect on the market.All prices should be checked including enforcing of hoarding act etc. This would bring goods over ground in large quantity. What measures govt would take to make other essential items like fish, chicken, meat cheaper,as the prices of these daily use items are skyrocketing day by day. Mutton is sold at Rs.240/- per Kg,Fish at 450 per kg Eggs at Rs.2.50 and not to talk about vegetables which are sold at premium.Govt has no control over all these items.The chief reaason being cost of transportation which has increased many folds owing to increase in diesel prices. Are we heading to Czar of Russian period where truck full of currency was paid to buy a pair of shoes.This brought the end Czar from Russia and workers ruled.
RE:Measures to counter high Inflation
by Sahadevan KK on Apr 01, 2008 09:45 AM Permalink
Media says Chidambaram is not ready to end future trading. It means he is in favour the mafia behind the future trading. Govt. must start an enquiry how our FCI godowns got empty after our government banned grain export.
RE:RE:Measures to counter high Inflation
by prashanthreddy reddy on Apr 01, 2008 10:51 AM Permalink
future trading is not responsible for inflation.,infact its a hedging platform for everyone.....its pure demand -supply gap ,we shud think of increasing the supply by focussing on increasing the agri out put...
The prices of any commodities are determined by a basic economic rule of demand and supply. You cannot manipulate prices by putting curbs. Any reduction in Import duty will not have any effect if the international prices are high. Today international prices forsteel are ruling between $1100 - $1200 FOB, that means a price of Rs.42900 - Rs.46800 International freight handling charges at port duties transportation charges from port to consumers. Against this the prevailing market prices and prices of various producers is ranging between Rs.31600 - Rs.37500 Duties transportation charges from producers to consumers, depending upon whether the producer is a government company or a private entity. Would Imports be viable even with Zero duty? Obviously No. This governmant has not done anything for the last 4 years to enable ramping up drastically the production capacities of various commodities to meet the demand of growing economy. Now it is crying over spilt milk. They had only thought of winning elections by doling out alms of 60K Crores to farmers to hide their inefficiency. How much of this 60 K will actually reach the farmers and when is a big question. Their governance is so bad and the government machinery is so much full of corruption that one can not expext any good arising out of these doles. The government has to be a moderator to check the prices, rather it had fuelled the price rises. I will give one example of the activities of AP Government -
RE:All these are cosmetic measures and will only lead to black marketing
by V Chakravarthy on Apr 01, 2008 08:02 AM Permalink
The example of AP Government -
The role of any government Housing Board is to provide for affordable housing units. For this purpose land is taken over by them from the citizens and a paltry compensation is paid. These land remeins with the board and housing units are not developed and even if developed are of sub standard quality. Now what the AP Govermnent under Dr Rajashekhar Reddy does is to sell bits and pieces of land out of the total land available by auction wherein the local buiders, realty merchants and politicians form a cartel to raise the prices astronomically to even as high as 1 crore and more per acre. The land bits are so selected that the supply is only a part of the total land available and all the above vested persons had already bought land in the surrounding at a very cheap rates and automatically the valuation of their holdings in the area go up astronomically. This is done periodically by controlling the supply of land even though the goverment aolds huge chunk. This leads to spiralling of prices and everything goes out of the reach of common man. Now the banks lend to the land owners based on the market rate as determined by the government auction and more money is availbale in the hand of the rich to further manipulate. All these actions of the government today to on the name of curbing inflation is all an eye wash and is bound to further effect everyone badly in the lomng run. But who cares? The government of the day is looking at u
RE:All these are cosmetic measures and will only lead to black marketing
by V Chakravarthy on Apr 01, 2008 08:08 AM Permalink
I meant a price of Rs.42900- Rs46800 plus internatioanl freight plus handling charges at port plus duties plus transportation charges from port to consumers. Similarly Rs. 31600 - Rs37500 plus duties plus transportation charges from producers to consumers
RE:All these are cosmetic measures and will only lead to black marketing
by Sahadevan KK on Apr 01, 2008 09:49 AM Permalink
Export good quality grains low price...., import smelly wheat on high price...., no much price on wheat procurement..., import the same wheat on packed cover... this is Chidambaram's growth policy. Only his pocket is growing.
After having presented a Budget that was destined to lead to inflation (my estimate is 8.83%) this government will now drain away forex reserves through imports, reduce import duty and cry over drop in revenues, then go and devalue the rupee and prop up the American Dollar. a government that says that it does not have 50,000 crores to interlink rivers writes off 60K crores loans against a NPA of 10K crores. The FM does not have means of reimbrursing the bank sector the loss due to the loan write off. Mr. FM and Mr PM where is fiscal prudence all that you want is your chair. Get your economics thinking right
Do you know that lately the forex reserves are not much sought after because of considerable devaluation in Dollar and appreciation in rupee. The RBI has not controlled the rise in Re. that it previously used to because it wants more liquidity in Indian markets.
RE:After Effects Of Budget!
by mandook on Apr 01, 2008 09:26 AM Permalink
Good. PC has been boasting of managing finances well. The media were euphoric about his "dream" budgets. All this is transformed into a bad nightmare dream. The measures now being launched to do fire fighting inflation are half hearted and not intended to help the poorer sections of people. What is the use of increasing export duty on "basmati" rice, who consumes basmati rice in India? Not even the upper middle classes. In all this government is also losing revenues and therefore the deficit financing will widen, leading to further price increases. Government has not done anything to raise production levels of commodities which alone can save the situation. PC should accept his failures and step down.
I think all commodity trading should be banned. Interest rates should be raised to fight inflation. All chidambaram cares is his legacy of consistent 8% growth.
RE:NRI's need daal too
by Newswatch on Apr 01, 2008 08:11 AM Permalink
Marginal increase in Interest rates might help to withdraw some money from circulation, but they have the unhealthy effect of increase the cost of funds and add to the increase in cost of production . This increase in costis generally passed on to the consumer. Increase in interest rates should be concomittant with increase in SLR and CRR for banks to cut money supply among the slew of other measures that are required.
Why not just wish away the Inflation, just like any other politically disgusting actions?... :-) I mean, MMS and Chidambaram can simply say, who says there is inflation? The Congress has ruled for the past 60 years and never once in our history has there been any poor people in the country. We live in paradise, all's well, everyone is a millionaire, our government is the greatest, and no one can point a finger at us. This whole idiotic inflation business is the brainchild of some ruddy opposition parties especially the BJP. That's why they should never be in power. Those should be the strict measures adopted to control inflation. Anyway, the measures taken thus far, seem to be in line with the above fanciful theories, innit?
RE:What do we do?
by Newswatch on Apr 01, 2008 08:16 AM Permalink
Agree. Since last year there has been a dearth of dal available to NRIs in their foreign markets. This ban will make it worse.
