This step may curb the money supply in our system, thereby reduce the inflation to some extent. But, it will have an effect of slowing down the growth rate. The Government should take steps to increase the supply side rather than targeting the demand to bubble.
RE:Not a welcome step
by partha sarathy on Jul 29, 2008 12:23 PM Permalink
There is a problem by increasing the supply side, people will continue to buy more goods and services, which will again increase the inflation. THe move by RBI is temporary and will help reduce the unnecessary demand, and cut on the frivolous expenditures. THis will reduce the inflation, it is high time we thought about our own spending patterns.
RE:RE:Not a welcome step
by partha sarathy on Jul 29, 2008 12:27 PM Permalink
Also, growth doesnot mean more goods and services, growth in real terms means more power, better roads, better food for all the masses. Recently a RTI petition revealed that millions of tonnes of foodgrains were spoilt as they rotted in the FDI godowns. THey could have been easily distributed to the poor and the needy. THe indian middle class and nouve rich care only for themselves, let us stop demanding more and start supplying more to the economy. Buying another car, when one already has a car is a frivolous expenditure, buying another pair of shoes, when one has two pairs is utter nonsense. We need to be wise in our ways, and not imitate the americans.
RE:Not a welcome step
by sudarshan venkatesan on Jul 29, 2008 12:53 PM Permalink
I am happy that my Friend Paratha is back... But has put same side goal.
RE:Not a welcome step
by shiva kumara on Jul 29, 2008 12:40 PM Permalink
Inspite of getting 8lac salary, I am finding it hard to meet the ends. I am paying a huge interest on a small house that I bought. I am driving a junk omni. I still eat rice and rasam. So, what spending pattern are you talking about?
RE:Not a welcome step
by partha sarathy on Jul 29, 2008 02:36 PM Permalink
that is what even i am saying, who asked you to buy a home, when you cannot afford one. OUr parents waited a long time to buy a home, because they were wise. WHo is asking you drive an OMNI. WHy dont you drive a bike and have safety precautions to avoid pollution? WHy do you increase pollution by driving in cars?
RE:Not a welcome step
by Amitav Banerjee on Jul 29, 2008 12:53 PM Permalink
this is great observation.No body really cares for the salaried class who are the worst hit and and sandwiched between keeping the job intact and raising the family .It is high time that we should speak up and save our life. amitav
RE:Not a welcome step
by PMP on Jul 29, 2008 12:32 PM Permalink
What spending patterns. Majority people today can't buy a decent house, can't travel decently, most household budgets are already strectched to limits. People from even so called affluent sectors like IT, Finance etc are also finding it very difficult to meet basic needs like housing. This govt has really created havoc with economy. When they came into power it was believed that duo of Manmohan, Chidambaram will make wonders with economy. They had inherited decently good economy from NDA govt. It looks like they are totally messed up with economy. Do you know current prices of flats in big cities? Now common cannot afford even 1 BHK in most of big cities.
Why do people need to buy homes, when they are not able to meet their basic needs as you say. Earlier days, people bought homes only after having substantial money for downpayments. Today people take loans simply because they dont want to be left behind the rat race of home buyers. THis loan culture was started by banks to increase money through interests, but it ultimately is bad for economy, because people simply cannot afford the loans.
RE:RE:RE:Not a welcome step
by partha sarathy on Jul 29, 2008 02:38 PM Permalink
You are paying huge rents because you have moved to a new city and left your place. Nobody pays rents while living in their home towns. It is only the migrant population that causes new problems to the cities. If you cant pay rents, go back to your hometown and do some job there.
RE:RE:RE:Not a welcome step
by partha sarathy on Jul 29, 2008 02:41 PM Permalink
the basis for calculation is not really important mr.gopal. Inflation is a monetary phenomenon that is affected by the spending in the economy. You buy more, more will be the demand, more will be the prices, that is inflation. WHolesale price index keeps changing and it doesnot really contribute to inflation. You may have bought a kilo of tomatoes for 20 bucks 5 years back, and will still buy at the same rate if the rains are good. But a TV, or a Home is much costlier today, and thus inflation is higher. it is simple logic.
RE:Not a welcome step
by Gopikrishnan on Jul 29, 2008 12:48 PM Permalink
I think what needs to be seen is the effect this interest rates have on inflation. This will depend on the line items which get included in Inflation calculation. As we all know, Inflation calculation in India is based on Whole sale price index rather than consumer price index. So not sure whats the extent on inflation dip based on this interest rate hike..
RE:Not a welcome step
by PMP on Jul 29, 2008 12:45 PM Permalink
If we extend this logic it will be like why should people need decent travel arrangements , why should people eat decent food, why should people need clean drinking water. Finally people would ask why should we pay taxes to govt?
RE:Not a welcome step
by gagan on Jul 29, 2008 01:34 PM Permalink
Thatz the rule of Cong govt. But still every individual support, close their eyes and ignores. Pota ruled out by Cong. everybody shut their mouth and closed their eyes, connecting four metros project down - No reaction, connecting all rivers in india to avoid flood/no rainfall suitation havoc project closed - no reaction, all corrupt official called back to work - no reaction, RAM SETU project by cong govt worth 250k Lakh to eat all money paid by we indians as taxes - No body will react. Atleast I try and avoid middleman for getting a house on rent, go to a quota doctor for treatment and return without getting treated and give reason to the doc for the same (sorry but i wont support quota system). Atleast start is required, so what are we indians waiting for???
RE:Not a welcome step
by PMP on Jul 29, 2008 12:55 PM Permalink
Forget about WPI or CPI. This is all jargon and useless. Finally what matters is are you gettings goods at affordable rates at your local grocery store. Are you able to afford decent flat in city you like. Check that. You will get all the answers