Thursday, July 28, 2011


In this globalised economy external environment really plays a significant role in establishing the economic stability of a country. And when it comes to India, though economy is domestically driven, it has also been affected by the external factors of the world around.

• Greece’s, Portugal’s and Italy’s economic viability and fiscal position deterioration is a concern.
• Brent Crude price in the upcoming months is still above US$ 110 a barrel, even after International Energy Agency’s (IEA) decision to release 60 million barrels of crude oil.
• Food and Agriculture Organization’s (FAO) food price index is 39 percent higher in June 2011 as compared to the same time last year.

These are few international factors which are constantly applying a lot of pressure on the Wholesale Price Index which can be clearly visible through the inflationary trend remaining close to the double figure and hovering around 9.2 to 9.7 percent.
Domestically if magnified then it points out to certain factors which are responsible for the Reserve Bank of India’s (RBI) tightening of the key rates by 50 basis points(bps) resulting in Repo Rate hiked to 8% from 7.50%, Reverse repo amounted to 7% and Marginal Standard facility rose to 9%, are:

• Index for Industrial Production (IIP) was revised and suggested that some moderation is under way because the index dropped to 5.7% as compared to the 10.8% in corresponding last year.
• Though monsoon throughout was even but the south west monsoon has been a tad less than normal and the KHARIF sowing this season in July, 2011 with respect of pulses, cereals and cotton has been lower as in the same period last year.
• Fuel inflation rose in this quarter of 2011 but the aviation turbine fuel got spared.
• Wholesale Price Index was 9.7% in April, 2011 and the Non-food manufactured products inflation was 7.0 per cent in the same period.
• The Reserve Bank’s estimates show that the total flow of financial resources from banks, domestic non-bank and external sources to the commercial sector during Q1 of 2011-12 was lower at 2,40,000 crore as compared with 2,63,000 crore during the corresponding period of last year.
• The Minimum Support Prices of Wheat and Pulses also rose coupled with the Wage-Price Spiral factor also ignited the inflatory prices in the market.

All these factors clearly highlight the pinch a common man’s pocket would be feeling looking at the prices of some of the essentials or the basic necessities going up ranging from milk prices to the fruits or vegetable prices. And also because of further tightening of the rates by the central bank commodities from automobile to acquiring of house all would be dearer to the consumer.

Although the key rates hike is to fight the inflation down but the domestic steps taken by RBI can’t be solely responsible for taming the inflatory tiger in the domestic market rather the appropriate monsoon for the bumper crop and the tamed fuel prices globally also are imperative factors to be considered.

Friday, July 8, 2011

A Supplicant or a Powerful Countrymen ????

A farmer with land is really sought after today, irrespective of the land being fertile, what the government wants is just acquisition of the land for so called development to happen in the rural areas. I find it ironic, first break the grip of the sole livelihood earner of the family, snatch his assets and then vows to make progress.
This is just an example of what is happening in almost every state of our country. Government sometimes forgets that it is for the people and only for them. Increase in GDP of the country is not the sole criteria for making progress in the society rather increasing the satisfaction level and happiness across the countrymen is the lynchpin for success and development. And to make this possible government needs to unsolve many labyrinths but two basic mazes are discussed as follows:
• Land Acquisitions- As we talk about land acquisitions in India adjectives like forceful, brutal, cruel, barbaric, inhumane and many more words strike our mind and all these harsh adjectives are against farmers (one of the poorest section of our society) and pro industrialism. Singur, Nandigram and Greater Noida are some of the examples to tell the gloomy tale but still the government has not come out with a deal to balance the required development which is essential for the country and the rural domain progress. Land is extremely vital in this densely populated country but snatching it from some and offering favor to others is not at all acceptable.
To sustain the farmers’ happiness and income generation factors making them the stakeholders of the particular project for which their own land is used would be the best possible solution rather than snatching their land and letting them die as a pauper.

• Inflation- Whether a person knows about it or not but this word is in everyone’s vocabulary these days. In any casual talk between parents or friends or any common man this nine letter word has its place. The reason is, everyone in the society has its burden on their shoulders. From corporate to the normal society everyone is bearing its brunt. And in this stage a customer is turned into a supplicant and is forced to ask for subsidiaries in every essential item for its living from the government and even in subsidiaries when the government decontrols certain products and black marketing, hording happens then it becomes a situation of grid lock and so where to go? How to insulate oneself from this price rise? In this situation again a systematic involvement on IT with a gargantuan scheme of using AADHAR in distribution of subsidiaries would be really affective as it is thought now by the apex body but its implementation is still a concern.
So to empower the countrymen with choices in their lives solution of these two basic but sever problem is a must. And once these roadblocks are solved and action is implemented to minimize them, the country’s happiness index would definitely improve dramatically though GDP would continue to soar (but GDP is not the real success for a country).