tag:blogger.com,1999:blog-45453483679772299752024-03-19T09:23:25.266+05:30Indian EconomyInvestment, Stock Markets, Industry, Business, Finance, Economics and The Common ManUnknownnoreply@blogger.comBlogger51125tag:blogger.com,1999:blog-4545348367977229975.post-51076069806051732172014-08-31T18:16:00.002+05:302014-08-31T18:16:54.641+05:30Implications of 1.5 Crore New Bank Accounts for the EconomyIn his independence day speech on 15-Aug-2014, Prime Minister Narendra Modi announced an ambitious plan to ensure Financial Inclusion for all Indians. He has announced the Jan-Dhan-Yojana under which one bank account would be opened for every Indian family, that currently does not have a bank account.<br />
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On Thursday 28-Aug-2014, in under 2 weeks, a campaign was launched across India where the officials from all the banks set out to open accounts. It is estimated that on this single day about 1.5 crore new bank accounts where opened by the different banks across the length and breadth of the nation.This was coupled with an equal number of accident insurance policies.<br />
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In six months, each of these accounts will have an overdraft facility of Rs. 5000/-.<br />
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Just imagine the total amount that will come into circulation. If this entire amount is used by the account holders, Indian markets will have about Rs. 7500 crore within each of these account holders that could be used by them after six months for retail purchases.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-49753049498268618072014-08-25T17:27:00.001+05:302014-08-25T17:27:12.621+05:30Landmark Decision by Supreme Court On Allocation of Coal BlockToday, the Supreme Court has declared that allocation of coal blocks since 1993 illegal.<br />
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The issue of allocation of coal-blocks shot into limelight in 2012 when the Comptroller and Auditor General of India (CAG) raised questions on the process of allocation of coal blocks during UPA-II. CAG had tagged a loss of 1.86 lakh crore rupees to the exchequer.<br />
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Since then a lot has happened connection with this scandal, that was subsequently referred to by the media as the Coalgate scam.<br />
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In the most recent development the Supreme Court has, today, delivered a verdict that is bound to have a far reaching impact on the national economy. All the coal blocks allocated since 1993 have been declared illegal because the process followed was non-transparent and dodgy.<br />
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The prices of stocks linked to the Coalgate tanked today after the decision was announced. Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-10377727166844390892014-07-10T16:27:00.001+05:302014-07-10T16:28:47.429+05:30Why I liked Budget 2014?Today, Finance Minister Arun Jaitley presented Narendra Modi government's maiden budget - the Budget 2014 - in Parliament.<br />
<br />
I personally feel the budget is good and would like to give the Budget 8 out of 10. I reserve the remaining 2 for implementation.<br />
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In the budget our Finance Minister has provided for a lot of developments, programmes and schemes. After a long time the budget appeared as policy document which tried to give an insight into what the national leadership thinks.<br />
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In his budge, the FM spoke of the problem regions and the difficulties that the economy faced. He spoke of how he meant to spent within his means. Economists (in the media) have appreciated the targets that he has set for bringing fiscal deficit down to 3% in the by 2016-17.<br />
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He has allowed FDI up to 49% in insurance and defense. He has launched a host of schemes for the rural economy.<br />
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<span style="font-size: large;"><b><span style="color: blue;">What I liked most!</span></b></span><br />
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The <b>best</b> parts of the budget, for me, are...<br />
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<b><span style="color: red;">1. FDI in defense.</span></b><br />
This will - on one hand help in expansion of the manufacturing sector and create more jobs, on the other hand it will reduce outflow of foreign exchange.<br />
<br />
<span style="color: red;"><b>2. AIIMS in each state</b></span><br />
Setting up of 4 new AIIMS this year with a promise to every state will have an AIIMS in the coming years.<br />
<br />
<b><span style="color: red;">3. New Medical Colleges, IIMs and IITs</span></b><br />
Setting up of new education infrastructure is the country's need of the hour.<br />
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<b><span style="color: red;">4. The focus on NE states</span></b><br />
A special effort and provision for the development of the North East states of the nation.<br />
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<span style="color: red;"><b>5. The specific allotments </b></span><br />
Arun Jaitley has made many specific allocations of 50, 100 and 200 crores on a wide range of schemes and projects. <br />
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<b><span style="color: blue;"><span style="font-size: large;">Time to Deliver</span></span></b> <br />
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Prime Minister Narendra Modi Government's Finance Minister has delivered. He has created satisfactorily created a road map for delivering on the elections promises. Now it is time for the government to deliver.<br />
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It is now up to the other ministries of the government to make effective use of the funds provided for in the budget and ensure proper corruption-free utilization.<br />
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<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-7820331400810749472014-06-01T12:39:00.001+05:302014-06-01T12:39:46.389+05:30Change in the economic outlook and sentiment in the wake of results of General Elections 2014It is surprising how much impact the type of national leadership has on the nation's economy. The sentiment changed overnight as it was declared that Narendra Modi's BJP had got more than 50% of the seats (282 to be exact) in General Elections 2014.<br />
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The very economy which looked gloomy and south-bound become optimistic and north-bound when the new national leadership was declared on 16-May-2014. The up-trend on the Indian bourses became evident on 12-May-2014 when the results of the exit polls were released.<br />
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The regime of Manmohan Singh led UPA-II from 2009 to 2014 had delivered a lot of negatives for the country, prominent among this being...<br />
<ul>
<li>We witnessed some of the biggest financial scams the country has seen.</li>
<li>The government's unwillingness to take action in the issue of bringing back black money.</li>
<li>The government's unwillingness to take action to stop corruption in government offices.</li>
<li>A policy paralysis - the government's inability to take timely decisions on important policies of national importance.</li>
</ul>
The people of the nation have pinned high expectations from the new prime minister Narendra Modi and his government.<br />
<br />
Narendra Modi has a proven track record of good governance in Gujarat during the last 12 years in which he was the Chief Minister of Gujarat.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-84882380428051505402013-12-12T22:34:00.002+05:302013-12-12T22:36:38.826+05:30Dismal near future for Indian EconomyIndian Economy stares at a dismal near future.<br />
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The index of Industrial Production IIP has shrunk by 1.8% and situation has been further compromised by double digit inflation numbers which is up at 11.24%.<br />
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With the announcement of these economic factors, the situation has just became gloomier for the Congress-led government at New Delhi. The results of the recently concluded state polls has clearly shown the Congress party that the people are not in any mood to tolerate any more indecision and inaction.<br />
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The Indian Government comprises of some the top economists who are able to talk impressively about the economic scenario, but who have failed to deliver when it comes to controlling the Indian economic outlook.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-30394823497247285542013-06-06T19:00:00.002+05:302013-06-06T19:00:33.026+05:30Gold v/s Current Account DeficitIndia economy situation is grim.<br />
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Our current account deficit is bloating uncontrolled and the biggest contributor to this is the increasing import of gold. Our citizens are in an increasing rush to buy gold. Statistics show that India has imported an average of 70 tonnes of gold per month during the last fiscal and this import does not seem to stop.<br />
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The government is exercising its control to make gold investment difficult, but to no avail<br />
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The government has increased in import duty of gold. The finance minister has asked the banks to stop selling gold.<br />
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<br />
I feel the government is treating the symptom and not the cause. It needs to speculate as to what makes gold so lucrative for the Indian investor. Our policymakers need to create a reliable and safe investment vehicle where people can put their money, instead of gold. <br />
Although, the immediate goal for the government is to somehow stop this inflow of gold, it should to take into consideration the fact that the Indian investors have funds at hand but they do not have venues to invest these funds into.<br />
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The financial wizards at the nation's helm also need to evaluate why people do not want to invest in some of the other erstwhile popular investment options like some entrepreneurship venture or shares or real estate or some other business.<br />
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Apparently more needs to be done to stop this gold rush.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-4474683287554228462012-11-09T17:23:00.001+05:302012-11-09T17:23:32.342+05:30Arvind Kejriwal strikes again - targets Swiss Account holdersAccount Holders in Swiss Banks are the target of <b>Arvind Kejriwal</b>'s recent expose and on top of the list of then names taken by the anti-graft crusader are <i>Mukesh Ambani</i>, <i>Anil Ambani</i> and some of their companies including the <i>Reliance Industries Ltd</i>.<br />
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This time the shares of Reliance Industries (RIL) reacted even as Kejriwal was addressing the media. The stock closed down 1%, while Anil's Reliance Communications (RCom) end down by 2.2%.<br />
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The center of Arvind's exposure was HSBC's alleged role in transferring the moneys to-and-from HSBC's Swiss branch.The names taken by Arvind as he made the disclosures today read like the who's who of Indian industry - The Burman's of Dabur, Goyal of Jet Airways.<br />
<br />
According to the expose - In July 2011, Indian Government received a list of roughly 700 people
having bank accounts in HSBC, Geneva. The list contains bank balances of
these people in 2006. Even the name of Kokilaben Ambani - mother of Mukesh and Anil Ambani - is supposed to have been in the list of account holders, although the balance in the account was nil.<br />
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Today's expose by Arvind Kejriwal has once again raised questions on the loyalty and honesty of the Indian politicians. <br />
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It remains to be seen how long the government can go on without ordering an all out probe into the corrupt practices of the people in high places within the government and outside.<br />
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One thing is certain - the Indian Economy is headed for a major shake down. Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4545348367977229975.post-89496891676401508082012-11-07T22:28:00.002+05:302012-11-07T22:28:18.856+05:30US markets tanked when Obama won!!!Apparently the stock markets had gambled that Republican Party would beat Obama, and that is why the US stock markets fell by around 2%.<br />
<br />
I actually found this reaction of the market forces surprising.<br />
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America has traditionally voted its Presidents power for a second term. There are very few instances when a US President was ousted after his first term.So, I think it was surprising when the markets reacted as if they had not expected Barack Obama to win. <br />
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Some experts on the television mentioned that the markets were reacting to the fiscal deficit and other economy related challenges the newly elected President is facing, but am unable to accept this discussion.<br />
<br />
Even Mitt Romney would have faced the same challenges. And, given the financial mess the US is in since early 2008, I don't think even he would be in a position to do anything radical to change the country's fiscal condition.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-80184470403757676822012-11-02T09:42:00.003+05:302012-11-02T09:42:55.529+05:30Reliance v/s Arvind KejriwalArvind Kejriwal's latest allegations against Reliance have rather serious implications for the Indian Economy.<br />
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<h4>
The Allegations</h4>
Arvind Kejriwal has this time targeted the biggest industrial establishment of India - Reliance Industries Ltd. He has claimed that Mukesh Ambani used his financial clout to manipulate government policies and wrongfully renegotiate the price at which his company Reliance Industries sells gas to the government.He has even alleged that Reliance is infact blackmailing the government to increase the rate by more than 3 times.<br />
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He further charged that 2 ministers were moved out of the Oil Ministry for their stand against Reliance's request. <br />
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<h4>
If the allegations are true then below are the Implications - As I see them</h4>
<ul>
<li>There are ministers who are not willing to give into the pressure from biggies like Mukesh Ambani.</li>
<li>The increased cost will be passed on to the common man in the form of higher taxes and / or tariffs.</li>
<li>If the jump in prices, as sought by Reliance, goes through - the cost of electricity and fertilizers is going to shoot through the roof.</li>
<li>Reliance will make a huge-huge profit. It is already making profits at the current prices - the entire threefold jump will be pocketed by the company.</li>
</ul>
<br />
If the allegation are not true then It will spoil the industrial environment of the country.<br />
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<br />
<ul>
</ul>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-58840953892498399112012-10-30T13:44:00.000+05:302012-10-30T13:44:03.886+05:30RBI reduces CRR, Sandy lashes New YorkThere have been two major events effecting our economy happened today...<br />
<br />
<h4>
First Event: RBI reduces CRR</h4>
RBI has infused about Rs 17500 crore into the system by reducing CRR by 0.25%. The news was not received very well by the bourses that were looking forward to and had actually factored in a reduction in the rates.<br />
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BSE tumbled about 200 points while NSE tumbled below the 5600 mark.<br />
<br />
<h4>
Second Event: Hurricane Sandy has lashed the East Coast of the USA</h4>
Hurricane Sandy battered the East Coast of the USA. It has ravaged New York the world's biggest and busiest commercial center. Reports of several deaths have also started trickling in taking the toll higher with each report.Once Sandy passes, the actual reports of losses of property and life will start coming in. <br />
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Power outage has impacted more the 6 million people.<br />
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New York Exchange was shut down for the second consecutive day. Trading is expected to resume on Wednesday.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-51380199886861571732012-04-24T22:00:00.000+05:302012-04-24T22:00:08.062+05:30Cheque Bouncing could also lead to a cheating case alsoIn future, if you issue a cheque without sufficient balance in your account be careful, besides a cheque bouncing case you could also be tried for cheating.<br />
<br />
Supreme Court of India, today, ruled that the two trials do not breach double jeopardy doctrine.<br />
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The decision was delivered by a bench of Justice B. S. Chauhan and Justice J. K. Khehar while dismissing an appeal for quashing a criminal case of cheating and breach of trust pending before a Chief Judicial Magistrate in Gujarat.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-74162544074966029752011-12-14T20:37:00.002+05:302011-12-14T20:38:22.361+05:30China may impose duties on US carsChina appears to be planning to impose duties on some cars imported from the United States (US). The move, being interpreted by a tit-for-tat by experts, has come after Barack Obama administration imposed duties on Chinese tires.<br />
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The duty war between the US and China is being seen as a big negative for the global automotive industry, which presently depends on China for its growth. If this duty war escalates any further it could serve as fuel to the fire, that the global economy is currently in.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4545348367977229975.post-67950822655300874742011-12-08T21:20:00.001+05:302011-12-08T21:38:09.470+05:30Air India and Kingfisher Airlines in trouble11 accounts of Air India and 10 accounts of Kingfisher Airlines were frozen by the Service Tax Department. This was done in view of default on service tax payments.<br />
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According to the Commissioner of Service Tax in Mumbai, Air India owes Rs. 150 crore while Kingfisher owes Rs. 70 crore. The commissioner further alleged that both had defaulted in paying in the money that they had already collected in the name of service tax from their customers.<br />
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Both companies are already badly debt-ridden.<br />
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It is reported that Vijay Mallya the liquor baron and promoter of Kingfisher Airlines, may be trying to sell Kingfisher House to raise funds, whereas the government owned Air India is expecting the Government of India to cough up the funds to enable it to survive.<br />
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The debt of Kingfisher is a whopping 12,000 crore, while Air India is sitting on a even bigger debt of 62,000 crore.Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4545348367977229975.post-13423692478147296132011-11-21T22:16:00.001+05:302011-11-21T22:29:23.096+05:30Rupee devalues - Stock Market tanksThe value of the Indian Rupee fell 1.6% today (21-Nov-2011) to close at 52.155 against the US Dollar, and the way things are poised it is likely to breach its all time low of 52.20 that it had touched on 3 March 2009.<br />
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This is likely to make imports expensive, and especially impact the oil imports which are already playing havoc with inflation.<br />
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Experts believe this has happened due to large scale exiting of the FIIs from the Indian Stock markets.<br />
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The stock markets in India tanked -<br />
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<ul>
<li>the Bombay Stock Exchange (BSE) Sensitive Index (SENSEX) witnessed a fall of 425 points (2.6%) to close at 15946, just below the sentimental level of 16000.</li>
<li>the NIFTY index of the National Stock Exchange (NSE) too witnessed a 2.6% fall (127 points) to close at 4778.</li>
</ul>
<div>
Similar, dismal trends were displayed by the European Stock Exchanges, also.</div>Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4545348367977229975.post-24814744298488350152011-11-13T10:24:00.001+05:302011-11-13T10:49:16.369+05:30Is Indian Economy crumbling!Indian economy has begun to show signs of fatigue. It is failing on growth and it is failing on inflation.<br />
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The IIP numbers have fallen to new lows. The growth was on 1.9% for September in contrast to the same period last year when the IIP growth stood at 6.1%. This is the lowest this figure has gone in the last two years. The other negative indicators are the state of our country's private airline companies. All are reporting losses. The crisis at Vijay Mallaya's Kingfisher is the worst among the lot.<br />
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Even as industrial growth is falling, inflation has made life difficult for the common man, who in turn has started to mount pressure on the Government. RBI has repeatedly raised its repo and reverse repo rates in a bid to control the beast called inflation - that refuses to be tamed. Each time the "great" economists of our country release statements claiming that inflation will come down, the beast retaliates with an even bigger leap upward.<br />
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The signals being received from the overseas are also not very encouraging. The debt crisis that has been brewing in Europe is threatening to bloom into a full fledge recession - double-dip recession as some people prefer to call it. Time alone will tell whether the Union will manage to come out of the crisis or whether there will be no Union left at all.<br />
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Leaders are fleeing the scene. After a change in leadership in Greece, Italy's PM Berlusconi has submitted his resignation.Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-4545348367977229975.post-67738891112588918022011-10-12T22:21:00.002+05:302011-10-12T22:21:24.441+05:30China Currency Bill passed by the US SenateUS has been voicing its concern for a long time over the way China has been using unfair means and manipulating its currency to the disadvantage of US businesses. It is said that the Chinese businesses have a 30% pricing edge over their US competitors due to the low yuan.<br />
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US lawmakers have reacted to this by proposing a bill that will allow them to punish Beijing for the manipulation.<br />
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The US Senate voted 63-35 passed the legislation to punish Beijing's currency manipulation that is often blamed in that country for the high rate of unemployment. Those against the bill have voiced their concern that the bill could go against the provisions of World Trade Organization. However, nobody has disputed the fact that the way China keeps its yuan low is unfair.<br />
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The bill needs to be passed in the House of Representatives before going to the US President.<br />
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Experts believe that if cleared the bill will trigger a large-scale trade war that will have large-scale consequences, especially in the economically troubled US and Europe.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-14202539679842492622011-09-30T22:07:00.000+05:302011-09-30T22:07:04.603+05:30Cabinet clears new mining billThe Union Cabinet has today approved a new bill for mining in the country, in which the miners will have to share 26% of their profits.<br />
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The new bill which will have be presented in parliament for its approval, proposes that the coal companies must share 26% of their profits with the local folks. Other mining companies will have to share an amount equal to their royalties.<br />
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The proposal will help local communities implement ambitious development plans which could change the face of rural India like never done before, that is if the government can come up with an effective anti-corruption bill.<br />
<br />Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-4545348367977229975.post-63209471011092688752011-09-23T15:43:00.001+05:302011-09-23T15:43:24.567+05:30Rupee declines against the US DollarTrading currently at Rs 49.76 per dollar, the rupee has declined significantly over the recent months to its 28 month low.<br />
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RBI Governor D. Subbarao has said that the movement of the rupee has nothing to do with fundamentals the Indian economy. He added that the rupee declined due to the fall in confidence in the global markets. He said that the Reserve Bank of India will intervene only there is volatility or potential disruption to macroeconomic situation.<br />
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-70885683470589553882011-09-21T22:02:00.000+05:302011-09-21T22:02:26.751+05:30Rural and urban poverty lines - 781 and 965 respectivelyA rural person needs Rs 765 per month while his urban counterpart requires Rs. 965 per month to live.<br />
<div>
<br /></div>
<div>
An affidavit to this effect was filed by Planning Commission in the Supreme Court in which it defined the poverty line at June 2011 price levels. It has said... <i>the poverty line at June
2011 price level can be placed provisionally at Rs 965 per capita per
month in urban areas and Rs.781 per capita per month in rural areas.</i></div>
<div>
<i><br /></i></div>
<div>
The affidavit by Planning Commission was filed in response to an order by a division bench of the Supreme Court requiring it to revise the norms of per capita amount looking at the price index of May 2011 or any subsequent dates.</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-9730599195051354662011-09-21T08:28:00.001+05:302011-09-21T08:29:10.194+05:30Ban on Onion Export LiftedThe government of India, on 20-Sept-2011 bowed down before the protesting farmers in Maharashtra and lifted the ban that it had imposed on the export of onions.<br />
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The ban had been imposed on 9-Sept-2011 in a move to help curb the soaring prices of onions in the Indian market. The move faced stiff resistance from the farmers in Nashik and neighboring regions of Maharashtra.<br />
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The political impact of the roll-back on the already fragile credibility of the UPA-government is another issue, but on the economic front experts believe that the prices of onion could head north-ward in the immediate future, adding to the common man's inflationary worries.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-45284074241538680862011-09-20T22:26:00.002+05:302011-09-20T22:28:38.733+05:30Impact of CreditEven as stock markets in India began giving indications of stabilization, IMF has bowled another googly.<br />
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IMF has raised an alarm over the debt situation in Europe and lowered growth projections for the 17-nation Eurozone to 1.6% in 2011 and 1.1% in 2012, from its earlier predictions.<br />
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The old saying in India - चितनी चादर उतना पैर पसारो (spread your feet depending on the amount of space available), in other words spend only what you can afford. Taking loan to buy luxuries is the sure-shot recipe for disaster. US has experienced it, now the Europe is going through the same experience.<br />
<br />
Excessive loan leads to non-repayment - causing either the borrower or the lender to suffer.<br />
<br />
We can only hope that the Indian government takes note and exercises caution with its policy of targeting growth on borrowed money.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-28342070336350898062011-09-16T18:46:00.000+05:302011-09-16T18:46:09.196+05:30RBI hikes interest rates - Will it fight corruptionThe "most popular inflation" control mechanism of the Government of India has been deployed once again. The decision of the 12th successive rate hike was announced by RBI on Friday 16-Sept-2011.<br />
<br />
In line with common expectation - RBI has announced an interest rate hike of 0.25% (25 basis points). After today's rate hike the repo rate has become 8.25% while the reverse repo rate has become 7.25%.<br />
<br />
Lets hope this works, because the government has lost a lot of credibility in recent times on several fronts including - combating corruption, good governance and internal security. If inflation does not come down quickly, it faces the risk of losing public sympathy even on the financial front.<br />
<br />
Financial stability of the common has been compromised drastically in the past few months. The government can give as many excuses as it wants, but the common man is seriously and directly effected by inflation and the failure of the government (even if for reasons beyond its control) could easily effect the vote appeal of the ruling coalition in the forthcoming elections.<br />
<br />
<br />Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-62372635561779167662011-09-16T10:35:00.000+05:302011-09-16T11:17:55.114+05:30Fuel for inflation - Petrol becomes dearerAdding to the woes of the common people, the price of petrol has been raised by more than Rs. 3 per liter from today - 16-Sept-2011.<br />
<br />
The common man is surely in for a big financial beating for the forthcoming festival season, because this increase in fuel cost will ensure that the prices of other commodities also head northward.<br />
<br />
Let us see what rest of the day has in store...<br />
<br />
RBI is expected to announce a interest rate hike.<br />
eGOM is expected to announce a hike in LPG prices.Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-61893119451494992592011-09-14T23:02:00.001+05:302011-09-14T23:02:59.076+05:30Inflation on the rise - is interest hike the proper tool to tackle itInflation in India refuses to let go. The wholesale price index for the month of August rose 9.78% compared 9.22% for the previous month.<br />
<br />
The measures taken by the government to curb the rising prices do not seem to be working. Reserve Bank of India (RBI) has raised interest rates 11 times in 18 months and the current rise in inflation is pointing to one more interest hike in the coming days. So much so, Indian Industry has begun to show signs of suffering from the effect of the interest rate hikes.<br />
<br />
Some experts argue that the route of interest hike by RBI is not working because possibly liquidity if not the cause of this inflation.<br />
<br />
Here are some reasons that have come forward in our discussions...<br />
<ul>
<li>a rise in the trend of unfair trade practices used to secure disproportionate and unreasonably high levels of profit. <ul>
<li>The issue is more than evident in the pharmaceutical industry where medicines that leave the factory for Rs. 2 to 3 carry the MRP tag of more than Rs. 30-40.</li>
<li>Simple nuts and bolts for bikes and cars that manufacture for a few paise are sold to the consumers for fabulous prices.</li>
</ul>
Where are the days when a decent profit of 10% to 15% was considered adequate? Can this not be controlled or should this not be controlled?</li>
<li>improper implementation of government policies and schemes... There is a clear lack of coordination between different government departments and the way the departments work within themselves.<br />for eg - <ul>
<li>The government announces a ban to export of onion and the agriculture minister goes public that he is not party to the decision.</li>
<li>Foodgrains are rotting kept in the open - the government does not have enough capacity to store them properly, yet people are hungry - even the Supreme Court has voiced its opinion in this matter.</li>
</ul>
</li>
<li>oversupply leads to inflation - The quantity of medicines that expire is increasing year-on-year, because some of the manufacturers seem to think that they can produce the entire spectrum and conquer the entire market. <i>This is just not possible</i> - so what happens - the <u>medicines expire on the shelves</u> within the distribution chain at the cost of the manufacturer. The manufacturer is forced to compensate for the loss incurred in this by increasing the prices of the regularly selling products - that's inflation.</li>
<li>Crude used to be available in the range of 20-30 dollars for a long time - surely the cost of extracting crude from mother earth has not gone up as much as the price it is selling for - is this much profiteering justified?</li>
<li>Last but not the least - corruption. Corruption has made so much in roads in our day-to-day activities that it has become one of the major contributors to the runaway inflation. An event like the Commonwealth Games should have ideally required a few crores to organize, but thanks to the corrupt organizers have siphoned off thousands of crores of tax-money and probably stashed it off in some Swiss Account. Now the government will have to raise taxes which will in turn send prices north.</li>
</ul>
There are many such reasons for the inflation that the common man faces, the experts need to examine these and take proper steps before things go out of hand.<br />
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Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-4545348367977229975.post-361694137110521322011-09-08T17:28:00.000+05:302011-09-16T11:20:19.263+05:30InflationInflation remains a major concern in the Indian economic scenario. The Government has been under constant pressure for its failure to control prices of food and other items.<br />
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The Wholesale Price Index (WPI) figures for primary and food articles released today, peg food inflation at 9.55% for the period that ended on 27-Aug-2011, while the inflation of primary articles stands at 13.34%.<br />
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Talking to reports in New Delhi, Finance Minister Pranab Mukherjee said that food prices were expected to fluctuate during the forth-coming festive season after which he said there will be a moderating influence.<br />
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So, as far as the common man is concerned, the minister has acknowledged that there is no relief round the corner.Unknownnoreply@blogger.com0