In the food grain procurement there is a concept call "MINIMUM SUPPORT PRICE (MSP)" (a price at which traders purchase the products from farmer). At present the MSP is at much reasonable level. A must have policy otherwise these traders/middleman shall purchase these items at throwaway price from farmer making our farmer suffer resulting in down slide of the largest section of Indian. Now what happens - These traders/middlemen sell these farm products purchased at reasonable rate to very high rate in the retail market. SOLUTION - A concept of "MAXIMUM RETAIL PRICE" needs to be introduced for farm product similar to "MINIMUM SUPPORT PRICE", instead of only "MINIMUM SUPPORT PRICE". This shall limit the rate at which the traders/middlemen shall be able to sell farm products. To start with this policy may be started with few products like Onion, Tomato etc whose rates are increasing exponentially day by day.This policy can be tried for checking the price rise.
Re: Policy Change required
by Jitesh Agrawal on Jan 14, 2011 03:47 PM
That is a nice thought but might be difficult to implement as farmers next day will start asking the maximum retail price making it expensive at the first point itself. Let me make it clear, I am not averse to farmers making more money, infact I will like to see farmers making the most of it as they have toiled to produce rather then the traders and middlemen.
What I think would be a right idea would be make these middlemen sell and consumers to buy ONLY through market yards regulated by Govt and no where else, and the moment prices start moving to levels of discomfort, govt can step in.
Re: Policy Change required
by srijan kumar on Jan 14, 2011 11:12 PM
your suggestion looks good but do u think our weak system can implement any such plan.otherwise govt.can open parellel subisided shops so that no one has the opportunity to exploit.we have to make a balance when apeing west.china has some thing to teach us here.
there are various erasons for inflation, corruption, demand and supply and fake currency, govt, regulations and policies,IB and RAW should mainly look in to the matter like fake currency notes which is coming from pakistan, statistics is immaterial to common man,figs which is shown in news paper, tv channels and internet websites are all fake, it the time to demand presidents rule in the country.
Re: Inflation
by Shaunak on Jan 14, 2011 06:37 PM
actually the notes printed by RBI is money created out of thin air with the sole purpose of monetization of government debt. This money is not backed by anything so in a way it is 'Legal Counterfeiting'. Trillions of rupees are created this way fueling inflation. Don't blame Pakistan - the real terrorists sit @RBI HQ in Mumbai.
I dont understand GDP growth and inflation links. If the inflation is 8%, doesnt it mean that all prices have gone up 8% and so the country's GDP would also go up 8% without showing any actual increase in production? If this is so, what is the hype about growth and all that?
Manmohan Singh is the most educated corrupt crook, He selected Thomas has CVC chief who is tainted. Now when the PM of the country is not bothered of the situation, we know where the country is heading. Now the idiot health minister Ghulam Nabi Azad, says the population may stabilize after 2065, when there will be more population the prices will increase. Just for getting Muslim votes the Congress party will ruin the country.
Re: Inflation
by MOHAN LAD on Jan 14, 2011 03:25 PM
Prices have increased because purchasing power of corrupt indian babus and politicians have increased in last 3 yrs under sonia/rahul and encouraged by bjp as their business people members have also made a killing. Check how bjp instead of agitating on issue of inflation which is severely affecting aam aadmi and a very live issue is harking on useless scams like bofors which they very well know nothing will come out of it. BJP is just making a drama of being in the opposition while in reality they are in collusion with Congress. People should throw both the party in Indian Ocean, clearly case of Sapnath and Nagnath.
Then even the slightest ebb in it and the corrupt and inefficient governance will take full credit for it.
But like a havaldaar hiding behind the tree the governance will take no action in letting it get developed well into the double digits upto say 13 or 13.5.
The food index is even beyond that right now.
Pranab and the hatt-virya cabinet has little time to combat the situation.
This is the brand of macro economics being practiced by our 'learned PM'? Inflation is largely due to corruyption, hoarding and middlemen. Raising interest rates will have NO EFFECT on this kind of inflation. On the contrary, it will have negative impact on corporate earnings. Very sad to see manmohan singh losing his vision completely.
Re: techie
by yash on Jan 14, 2011 01:43 PM
I agree with you, by tightening money supply, there will be no effect on prices / Demand of Onion or Petrol, Prices of these are determined by Other factors, like production and international prices of crude oil
Re: Re: techie
by migtwentyone bis on Jan 14, 2011 02:06 PM
good question and reply ny techie and yash,i agree the basic law of demand ans supply which even most powerful cannot change,there are tooo many people in india.
Is their any way for investing in inflation as this is one thing that is growing continuously and had beaten all other investment product and dam sure that it will grow continuously for nest 100 years.
Re: Investing in Inflation
by Ganesh Iyer on Jan 14, 2011 01:54 PM
Well ... Some PE or leading business house should establish an "Inflation ETF" in which we can all then invest [sadly then, all investors in such ETF would wish inflation to keep going up !!" ]
