Thought for the day
”To succeed in life, you need two things: ignorance and
confidence."
-
Mark Twain (American, 1835-1910)
Word for the day
Supplant (trn verb)
To take the place of (another), especially through intrigue
or underhanded tactics; as, a rival supplants another.
(Source:
Dictionary.com)
Teaser for the day
Congress in catch-22 over the issue "whether it
carries a national legacy or its legacy is limited to the Party itself."
If Gandhi, Nehru, Patel, Azad were national leaders then any Indian can
claim their legacy. If they were just Congress leaders, what legacy is there to
claim?
My "truth" not the same as yours
I believe this world is like a prism. You see different
pictures, colors and hues depending upon from which angle you are viewing the world
and in what light you are viewing. Therefore, while all views and colors are
equally valid, your "truth" is always what you see from the point you
are standing at a given point in time and under the current light.
In past few years inflation has been the driving force of RBI's
monetary policy. Both Gov. Subba Rao and Gov. Raghuram Rajan have consistently
emphasized on perils of higher inflation. In his recent statements Gov. Rajan
appeared very firm and committed in his fight against inflation.
I spoke to 10 people from various sections of society yesterday
to understand how inflation affects their lives. To my surprise, all of them
had different perception about inflation. Certainly they all view the issue
from their own angle and under the light of their own circumstances.
My problem is under such conditions what is the relevance of
RBI's fight against inflation? From my interaction with people and experience
of travelling across the country I understand that through tight monetary
policy only a small part of the problem could be handled. The development,
fiscal, monetary authorities may need to work in tandem to provide a holistic
solution to stabilize the prices. The following are the few pertinent points to
consider in this context.
(a) For almost half
the population, primarily living in rural areas, food inflation may not be a
matter of serious concern. This section mostly survives on grain based
nutrition and obtains their staple ration through PDS or sustenance farming.
Healthcare, agri input, and to some extent transportation inflation is a matter
of serious concern for them. Effective implementation of food security, better
connectivity, drinking water, sanitation and primary healthcare close to home
would provide material comfort to this section of the society.
(b) Urban, semi-urban
households suffer from a variety of inflation. Prominent amongst these are
education, health, energy, transportation, communication, rental, protein,
fruit and vegetable. The political rhetoric and central banker's focus exclude
many of these critical elements in their fight against inflation. Better public
health, education and transport services, energy efficiency, affordable
housing, and better employment opportunities closer to home would be a more
suitable solution here.
(c) Debt laden infra
and realty developers are more concerned with inflated cost of capital and wage
inflation. Energy and transportation cost also bothers them. Better execution
standards, simpler administrative procedures, automation, good corporate
governance structure, stricter compliance norms and vibrant retail debt market
could alleviate many problems for this sector.
We need to appreciate that maintaining the negative real rates
for households (household inflation minus term deposit rate) for a long period
is the biggest scam perpetrated on the poor people of this country. The
inflation tax, as I call it, paid by poor and middle class savers for cheaper
financing of “crony socialism” and unscrupulous businessmen, has after all
caused serious damage to the basic fundamentals of the Indian economy.
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