Of all the debates taking into shape the biggest and hottest debate in the present context is ‘Inflation’. Today ‘Mehngaayi Dayan’ is the foremost enemy in the true sense. The irony of the situation could be very well thought of, as the Our Honorable Prime Minister, Our Home Minster and the Finance Minister; the three biggies are well renowned Giant in Economic matters and had been always classified as the best of the scholars on the subject of national economy and finances.
The paradox of this present situation could be assessed from other angle as well that despite that Indian economy being least affected out of passing year recession our economy was considered more stringent against any sort of the economic downturn and the supporting factor was our sound financial and economic systems. But current Inflationary situation has led this government and not just the Government but also the top most policy makers and bureaucrats being in-charged with money related matters; mainly authorities and economists sitting at RBI to rethink and rewrite the theories governing relations of Money supply and inflation. As a matter of fact, the most important thing to be noticed here is that in year 2010, to work out inflation based on the various controlling tool RBI has increased various set of interest rates not just once or twice, but 6 times, but all in vein. All the tools to control the inflationary outburst are turning out to be futile. Adding grievances to this incessantly growing wholesale price index is food inflation. With Onion and tomato leading the rally of Peak Price, many other vegetables are following the suit. Well contrary and except always prevails so is the case here as well, Potato, the uncrowned staple food of India, is available in bumper amount this year, so the obvious fact is the price at which it is available into market. This vegetable is the only relaxing element in the food budget of Indian ‘AAM AADMI’. Further fuels have been added by the unstoppable price of the Petroleum and related product, and situation has been truly worsened by the spiraling impact of the same. With hike in the petroleum prices every other activities gets affected and as a result everything one or other gets costlier and costlier.
Our top most leaders came along together to make out a serious step against Inflation in the ‘MahaBaithak’ at the Prime Minister’s house in the first-second week of the new year. And surprise package turned out as the result of this whole drama. As after long hours of discussion the outcome which turned up was really surprising for every Indian citizen, Mr Prime Minister asked every Indian Citizen to consume less of the costly items and they should pay their heed to more cheaper foods; namely Yellow Peas. All Bullshit, Mr Prime Minister, was it the whole thing that you and your intelligent economist guys had into your mind after hours of discussion that’s really surprising and they are running the business of the politics into our Nation and we have chosen them to our governing body. May God bless India!!!!! Further to add salts to the wounds of the vast middle class of the India, Mr PM said that Average Income of the individuals have increased in India and people are now demanding more goods against their rising income and aspiration and because of which price of every items of the economy is soaring. Perhaps Mr PM has forgotten the data on the Poor Mass of India, the data of 22% people below poverty line is still unchanged and the ones who are above this line of quoted non-poor are no better, Infact they are on the edge of two sided sword of Hard Luck. Well that’s any ways of no use for any matter as I know that our Mr Singh (the PM) must have these data into his mind while making these announcements. Well, consider it to be human error country mates.
But the question remains as who actually to be blamed for this engraving situation in the country, as only policy makers are erring or there are many folds yet to be unfolded in this whole game of Inflation. Let’s check it out the major issues related to the same as why this situation is taking a shape of danger day after another.
Non- Effective RBI Policies without proper investigation of situation - As per an Interview report of Mr D. Subbarao, Governor, Reserve bank of India, to a certain private news channel, it was said, Nevertheless, controlling inflation -- particular food inflation -- is no easy task in this environment, given the ample amount of global liquidity and the natural disasters/poor weather conditions that have been negatively impacting the worldwide farming sector. So taking queue from same I proceed with that if the problem is with the global liquidity and also natural disaster and poor whether then how monetary policies (Rate hike) that too on regular basis would check out food inflation, which is the actual concern of the common man. Though it is claimed that Indians these days have more money with them because of their increased income caused by sixth pay commission implementation and turning up of the MNCs in the country and to suck up money from economy, Monetary Policies reforms are coming month after month. But the resultant is all zero and Inflation is far from the control limits. So problem actually lies somewhere else and that needs to be tracked. And it is also requested to our well trained policy makers that kindly find those roots of the problem and stop over-burdening the pockets of “AAM AADMI”. It is to be understood by Mr Rao and His colleagues that these monetary policies work through demand-side management and that too on expectation basis, meaning that continuous hike in the rate is not much demanded as these deficit created in liquidity is a very recent phenomenon and your monetary policy checks are creating an unduly pressure on the common men wealth and budget.
Black Marketers- Recently we had a bad time with ‘PYAAZ’ Inflation or Onion prices shooting to the peak and all of us had a time when we used to use those onions in small quantities and then using only meager amount into our lunch or dinner. There were multiple operations and raids made on the behalf of governmental bodies to find out the causes of this unbearable hike in the price of the Onions and the results that turned out of all these operations and raids were that black marketers and hoarders had unnecessarily stocked these Onions and were not releasing to the market in order to take an advantage of the same. Similar sort of the stories are common to many of the products which are being used by common man.
Okay, let’s accept this claim of the authorities that black marketers or hoarders have stocked these foods or others items. But government does have the option of importing those items for the common man who doesn’t find himself capable of buying that costly stuff, whose prices have soared intrinsically, as we pay taxes to the government and expect a return which for our betterment. But here too have a point that due to tight demand-supply and other structural mismatch importing goods in ample amount too is limited. So final road to well being demands the better management and supply chain network along with developing certain monitoring bodies to keep a track on these black marketers on regular basis and work more effectively to wipe out any scope of hoarding activities.
Policy Makers- Our present government do possess brilliant economic heads; namely- Mr Manmohan Singh, Mr P Chidambaram and Mr Pranab Mukherji and to company them on the matters of economy they have people like Montek Singh Ahluwalia, Mr Kaushik Basu (Chief Economic Advisor-Finance Ministry) and Mr C Rangarajan (Chairman, PM Economic Advisor Council). These heads of economics came together to discuss the issue of inflation in few weeks passed, and surprisingly the outcome of the meeting was in manner to put salt the wounds, discussions result declared that Indians now have more money and demanding more goods and this is leading to the high prices of the goods. And it was asked to every Indians that they should stop their consumption of those products which are costly and this would automatically put a downward thrust on the prices and hence price boiling will get normal.
Okay Sir agreeing to your statement we start consuming the goods of the lesser cost but sir there are generalized saying that lesser prices means goods of lesser quality and caliber and that may impact to our health also. Another point is that if we start taking Yellow Peas instead of Costly Pulses then side effects of its consumption are disastrous. And not only that, one should stop taking nutritious oils and refine oils and should start taking ‘Vegetable Ghee’. Sir you must be aware of the level of toll that continuous consumption of ‘Vegetable Ghee’ creates. So still you would like to suggest us about what shall we eat in order to avoid inflation and what we shouldn’t? Won’t it be better that top heads should trick about certain better ideas to tackle inflation of this sort.
In a statement made to a business newspaper, Mr Kaushik Basu said that ‘You have to keep in mind that raising tax does not raise revenue. At times, raising tax means the activity shrinks and total revenue goes down.’ But sir the Mathematics of tax that we have studied generalized the phenomenon that if tax increases then price increases and that increased prices are borne by none other than people like us and ultimately common men end up paying more taxes and thereby adding to the government exchequer. Though your points also stand valid but Sir, Kindly notice that reduced activities does not include lesser consumption of food and stopping the consumption of those items quoted as basic amenities. And had it been so then Mr Finance Minister would have increased the estimated tax collection target to Rs. 4.46 lakh crore against last year’s budgeted target for all India collections of Rs. 4.3 lakh crores in Past fiscal year.
Billions of Black money of our rich politician at foreign banks- Recently we all must have heard of the WikiLeaks have disclosed about the Multi-Billions of Rupees being amassed in the foreign banks; namely United Bank of Switzerland. Mr Rajnath Singh, Former BJP President, said to a newspaper- According to the data provided by the Global Financial Integrity (GFI), India has more black money than the rest of the world combined. India has almost 22.5 lakh crores of black money stashed away in Swiss banks and other tax heavens, he said, adding 'this amount is nearly half of the total GDP of the country and around 13-14 times of our total foreign debt'. In another announcement by Mr Pranab Mukherji, Finance Mininster, said that there are estimated $ 462 Billion to $1.5 trillion has been stashed away by Indians into banks abroad. The size of the latter figure is one & half that of our Gross Domestic Product. Given that if those money are brought back we being at the receiving end would be benefitted most not just in terms of reduced prices of the commodities, goods, edibles etc. but also in terms of better infrastructure and ultimately to a better life
Adding to this list is Scams of sizes varying from Rs 50 crores Aviation Scam to Rs 1,75,000 crores 2G spectrum allocation scams. Had these money been raised and been added to the government exchequer then the whole story would have been different as the so called poverty, if could not be eradicated, then it could have been brought to the sufficiently lower level.
There are many more chapters that can be opened here to bring into notice problem like inflation to the kind notice of the authorized bodies of governance. If even a single plea of mine is heard through this message then this effort of would be considered to be successful and I would really appreciate the Government for listening to Common Man voice.
Kaisar Ali
PGDM-Marketing, Economics (Honors)
