Our FM is increasingly looking like the proverb- ial umbrella with a life time warranty-the only conditions that apply are that it should not be used against rains or sunshine and be protected from cockroaches ! When the external events have challenged him, he is clearly failing !! Why is that only during Congress regime, the prices rise abnormally ?
the rise in price of petrol is still not sufficient to buffer up against the ever increasing oil prices... we have to take this hard hit continuously as the govt. continues to buffer the economy without a proper framework...
agriculture - which is touted as the backbone of india has now given way to IT (that too mostly in the services sector)... as a result forex reserves improved, share markets rose and coupled with some good takeovers over the last one year, the anticipation of indian cos. has risen up... india shone but only on one side... the other side of the coin could not make such a quantum leap...
unfortunately, the rising costs are shared by all while the boom is shared by a select few... this is the current problem...
view 1:
the underlying logic of raising the interest rate by the RBI is that the banks would thenpass on this to their customers who take loans... theoritically, then because of the high interest rates (supply-demand is assumed to be elastic), the amount of loans would come down, and hence less cash flow in the market - which would again mean that the lesser money the consumer has - the lesser his demand - the lesser his demand (again elasticity!), lower the price...
RE:inflation...
by Seshadri on Jun 14, 2008 03:45 PM Permalink
view 2:
the alternative - rising of interest rates was probably a stop gap option for RBI so as not to lose the effective current margins (read interest rates)... and hence i presume that the control is not on inflation as a whole, rather on the bank's anticipated interest gains...
problems erupt when the demand-supply theory is not strictly adhered to (which happens 99.9% of the time!!!)...
the banks probably would raise 2% above the RBI rate...
while arguing that this would control inflation, one has to consider the nature of the inflation, this is not an artificial hike rather a real and permanent hike caused by high fuel prices (mainly)... if IOC were allowed to sell petrol at its actual price (the price devoid of subsidy), probably the inflation figure would hit a silver jubilee!!!
so, essentially, the solution would lie in harmonised growth, which would ensure that all sectors grow at a uniform rate without too much pressure on the pocket...!!!
It is only the official figure which for strtegic reasons by the govt would always be kept than what actually it is!With rise in petrol prices which affected almost all the economies of the world,inflation must have factually crossed the double digit.RBI's mere rising the lending rate may not have that salutary effect unless followed by some more stringent measures like increasing the cash reserve ratios liquidity requirements by banks to curtail money supply.Well!While the UPA's inability to contain cannot be the sole factor for the rise in proces,the overall surging prices of all essentials all over the world also is a determinant.It is time for rescheduling our priorities of planning & allow the agricutural sector to enjoy its due share in the nation's exchequer with a view to increasing the yield and solve food problem to some extent.The increasing consummerism which is not a good sign but an off shot of social spending resorted to by the neo rich thanks to the high pay pockets in certain sectors like IT etc needs to be stopped.Unfortunately,we started believing in spree spending on avoidables and waste precious food etc as we observe in parties hosted by the rich and the upper middle class.Despite fat & fabulous income,the habit of saving and thrift are becoming almost extinct due to false prestige and false impression that life means inculcating western style of spending etc.Left parties should shun bargainig too much & blackmailing the govt to concede to its wishes.
I suspect that this is also the after effects of India's failure to proceed with the nuclear deal. In that case, Left is largely responsible for this price rice.
Inflation is no exception. India will go into civil war in the next 20 years if this continues or go back 30 years. One of them is sure to happen.
The concept of saving doesnt make sense now. YOu get 5% return on savings vs 10% Infaltion. GOd help people working in unorganized sectors who do not have retirement benefits.
THe good old days of BiCycle is going to be back I guess.
RE:For every thingthat goes up will come down
by Aam Aadmi on Jun 14, 2008 03:38 AM Permalink
ok when will the milk come down to 5 paisa/liter. That's what my grandpa used to pay.
RE:For every thingthat goes up will come down
by peace lover on Jun 14, 2008 03:49 AM Permalink
when the earning also goes back to 50 paise a day, that's what your grandpa used to earn
RE:For every thingthat goes up will come down
by Aam Aadmi on Jun 14, 2008 04:41 AM Permalink
that dosn't answer my question. I meant how long before that actually happens.
some one said our currency will be come Void ... i agree for that , may be we have use gold like olden age .. Government has to take proactive steps ..its a country of 110 crore people .. u cant dare to think to take a step as u want ...it effects everyone .. My view is to lets learn now atleast , we need to decrease dependence on other countries ..we need to follow the success steps of Japan after a big attack , there are No.1 in many aspects
RE:BJP CRIMINAL LEADERS LEARN ECONOMICS FROM THE BOOK
by Hebbar R on Jun 15, 2008 05:33 PM Permalink
The moderator has disabled the "Report Abuse" button. Seems to indicate the pro-Congress bias of Rediff.
But, the BJP (you may call them criminals - it is a democratic country and you are eligible to your views)atleast follow a book. The Congress seems to be taking the Aam Aadmi to be a "dummy".
Do UPA leaders know that India's currency is rupee, which is used by aam adami. Dollar is currency of only congressi leasers with Swiss Bnak accounts.
Is it surprising that they would defend dollar and not rupee?
Has USA ever defended rupee? Most of India's inflation is due to this mistake beside printing rupees to pump the stock market. India's inlation is a self inflicted wound, thanks to clueless and corrupt congressi
RE:Defending dollar but not rupee
by Albert Adibadla on Jun 14, 2008 02:43 AM Permalink
BJP CRIMINALS . IS THERE ONE IDIOT FROM YOUR NATIONAL LEADERSHIP WHO CAN EXPAND AND SPELL GDP??
THE ENTIRE CRISIS IS BECUASE BJP STALLED THE NUCLEAR PROJECT. INDIA'S ENERGY CRISIS CONTRIBUTED TO INCRESE
RE:Defending dollar but not rupee
by Hebbar R on Jun 15, 2008 05:36 PM Permalink
Wrong again. The Nuclear deal was stalled first by the Left who are allies of the Congress. Things could change if the Congress starts treating the opposition as adversaries instead of enemies.
It is foolish to conclude that the Nuclear deal has anything to do with inflation.
