Tacit Confession of guilt by Prime Minister Man Mohan Singh on economic crises

The guilt:

The Congress Government headed by Prime Minister Dr. Man Mohan Singh has completed 8 years in office. Before that BJP was in Government for mere five years. Since independence of India in 1947 different Congress Governments have ruled for about five decades but to tackle with inflation has been its dismal failure on all occasions. The fact that Prime Minister admits that situation of the nation is as worse as it was in 1991 amounts to an admission of guilt because in 1991 he had blamed the misrule of other parties in last 3 years for the escalating fiscal problem. The fact that he and this Government is in power for 8 years and it could do nothing to prevent the situation, is nothing but an admission of guilt of mis-governance.

The proof of guilt of mis-governance of nation and economy: Continue reading

Celebrating inflation under economist Prime Minister Man Mohan Singh

These are days of celebration in India. We are celebrating inflation. High prices of food products. Instead of importing the expensive food stuff, the Govt. has decided that it will bring in Multi Brand Retailers like WalMart into India to share the loot. At what price this decision was taken will remain unknown till the Auditors will assess it. Considerations will be known when some journalist will investigate in genealogy of all concerned. Why such a sudden rush? It has no clue what to do with inflation. Does government knows what to do? RBI has decreased Cash Reserve Ratio. Last time it had reduced repo rate. So how bad is the situation? What is the worth of one rupee? This:

GarlicRs. 0.89 buys this one small Garlic.

And if we can afford to spend slightly more than a buck, we can buy this vegetable:

Bitter Gourd or Karela

It costs Rs. 1.08 only. Just the above one small piece. No More.

While Government is digging new holes to fill old ones, the Stock Markets are rejoicing over the decision of permitting foreign retailers to do business in India. However the past track record of Multi National Corporations indicate that they are the worst exploiters of the system. When a system with extremely weak/corrupt law enforcement, like that in India, exists, Corporations have treated consumers like fodder.

Any way I had one question: How the Prime Minister sleeps at night?

Does it not bother him that Millions of poor household in India has very meager fixed income and any increase in prices of food stuff is a punishment to go hungry at least once?

Or as every one says; He does not care at all?

Or he really has no clue? Like every one else.

Does a person holding highest position in the country for 8 years owes it to nation to explain what is wrong? Even if he was not elected directly by people but is in Office by being member of Upper House.

Can such questions be asked under Right to Information Act?

Several years ago, I saw a very meaningful painting and I shot a clipping which is now my desktop picture. The painter has illustrated the scenario very well. Here is a screenshot:

King and his courtiersThanks to the imagination of painter.

© Sandeep Bhalla

Lungi, Finance and Inflation

A few days back I bought two Lungis. For those do not know, Lungi is a traditional pan Indian costume worn by males (almost). Actually it is a long piece of cloth which is rolled around waist just like sari. It is wrongly presumed that it is worn only in southern India. The fabric, print, colors and style of knotting change from one language pocket to another but it is the traditional relax-wear (in some States it is the Formal-wear. Ever seen P. Chidambaram?). I discovered the comfort of Lungi about a decade back when due to a surgical procedure I started using it. But I fell in love of it ever since.”]

This is not an advisable use of Lungi. Click pic to reach source.

The issue here is not of my taste in menswear but inflation rather disparity in prices of goods. I purchased the (southern) Lungi for Rs.99/- a piece (approx $2/-). I distinctly remember that in 2008-2010 it used to cost Rs.80/-. While popular beer at that time used to cost Rs. 35/- and now it costs about Rs.70/- i.e. double. Milk which used to cost Rs. 19/- per litre now costs Rs. 40/- per litre. Similarly vegetables, pulses and fruits all have doubled in just 4 years. This is the ground reality. If some one differs I can give prices of all these items.  Lungi is manufactured  at a very small level. Artisans from villages work up and dye these Lungis. By it’s very nature it is not a factory produced corporate product but a kind of household trade.

My question is: How come that price of Lungi has risen only by 25% when everything else has risen by 100%? And how those artisans whose livelihood is dependent on this product, are going to meet the inflation with just 25% increase in the price?

The statistics of poverty given by United nation at this link is meaningless, because it measures it statistically not realistically. Rising income can not comfort unless the Food Prices do not rise in higher proportion than rest of the products. If this trend does not stop, it is extremely dangerous for the poor section already on fringe of malnutrition.

RBI repo rate cut

RBI has today announced that it is reducing the repo rate by 50 basic points. It is to be noted that there is no substantial reduction in inflation nor there is any respite from high import bill due to high prices of Crude. So why is this cut. Last October on 25th to be exact I had predicted that RBI is trying to extinguish fire with oil by raising the repo rate because such measure is inflationary. While inflation could not be controlled, high repo rate certainly adversely affected the cost of production resulting in steep fall in industrial production. Two steps forward, one step backward. The dance rhythm of RBI is amazing. Question is:   If increase in repo rate was to control inflation and it worked, why reduce it now?  There can be no answer for these steps are taken only for psychological effect. In reality it has no meaning or very little effect. In any case the economy is tumbling. I wonder if the Humpty Dumty has already tumbled? Let us wait and see!

© Sandeep Bhalla

GDP estimation for 2011-12

In past several posts under the category Finance, I have been saying that the Governments have no clue as to what is happening on financial front. It is just groping in dark. See another example:

As per government estimates, Indian economy grew by 6.9 % in 2011-12 fiscal. The overall growth data was computed after taking into account 6.8 per cent industrial output in January. However, as per the recent data by the Central Statistical Organisation (CSO) the January industrial output works out to be 1.1 per cent and not 6.8 per cent as estimated earlier. Accordingly, the cumulative growth figure for April-January (2011-12) was lowered to 3.4 per cent, from 4 per cent. The downward revision, sources said, could have a bearing on the economic growth figures for the last fiscal, which was 6.9 per cent, the lowest in the previous three financial years. Finance Minister Pranab Mukherjee had already asked the concerned authorities to look into the impact of sharp revision of the Index of Industrial Production (IIP) numbers and termed it as “totally baffling”. “I can understand if there is error in calculating 0.1 per cent of 0.2 per cent, but from 6.8 per cent to 1.1 per cent, it is totally baffling,” Mukherjee had said. (Source: http://m.economictimes.com/news/economy/indicators/iip-blunder-government-may-lower-gdp-estimation-for-2011-12-fiscal/articleshow/12673255.cms)

So what should we do? Keep your fingers crossed. Stay away from schemes offering very high returns. Make no smart investment. Keep your money in your pocket. If you have invested in markets, start booking profits on every rise. Start a Kitchen Garden and save money on vegetables.