Friday, October 28, 2011

Inflation not coming under control!

Again and agin the headlines scream at us on food inflation hitting 11%+ playing havoc with our budgets. Things just don't seem to be coming under control of the go ernment and the RBI .

I am sure the RBI is perplexed on what they need to do.
here are a few thoughts from me on why inflation is rising.

1. The mood among people positive especially since the economy is growing.
2. More people aremaking more money than they dreamed off and hence they are willing to pay for the stuff that they would like to eat. Basically they are moving up the ladder and the food consumption portfolio of people's choices are changing
3. A lot of new restaurants and chains have opened up, again competing from the same basket of production and they are willing to pay more for it.
4 our supply side has not moved up or changed to reflect realities. There has to be fiscal policies which enable this.
5. Middlemen are stronger then ever. The dalal makes more money and WANTS TO MAKE A LOTLOT MORE.
The RBI monetary policy will not have an effect. It will finally make our country no
competitive since investment will stop completely

we need to move to fiscal and transparency measures. Increasing the msp (minimum selling price)for farmers is only going to fuel inflation- not because the farmers get more money,but because the middlemen Continue to make the same 50-100% profit if not More.


I hope someone in the government is listening.


Res

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