Circus - gas - Reforms - ???  Looking at this whole AAP Circus;I have realized that people are not sure exactly what they want and will Gravitate towards whoever provides them what at that particular point in time. For starters,Why is it that most people are opposing the Hike in Gas Prices from April 2014? This is because it will raise Prices for Transportation,Power and Cooking.  End result will be a Further Increase in Inflation AKA Mehangayeee under which most of India is today snowed in. But nobody looks at the Primary cause of Inflation in India today. That is The Decline in the Value of The Rupee which has made all Imported Products [Crude Oil, Coal,Natural Gas,Fertilizer Components,Electronics,Gold,Silver,Dals,Cooking Oils,Nuts,Dry Fruits and other components which depend on these products have become expensive as well]. How about the Government or Mr Kejriwal doing something to reverse the Weakness in the Rupee?[Rupee has gone from 37 to the Dollar to its Present 62 in 5 short years]. Which means even if the Price of the Imported Component in Dollars has Fallen[as in the case of Gold and some electronics as well];the Rupee denominated Price which all Indian Consumers have to pay has Risen & Risen Appreciably. So how to strengthen the Rupee? There are only Three Basic Ways. 1)Make India a more attractive Destination for Foreign Investment so that Foreigners desperately stampede to Invest in Indian Assets like Stocks,Bonds,Land,Companies,etc. AKA Reforms. or, 2)Slash Indian Government Spending Sharply especially on Subsidies so that The Government has to borrow less Money from Outsiders as well as Private Sector Savers. AKA Rationalizing of Subsidies. or,what is by far the worst option IMHO;because it tremendously raises the Cost of doing Business in India --- 3)Offer Interest Rates on Indian Assets which are higher than Global Competitors-Which is what the RBI is doing currently. Basically,The RBI is carrying the Can for the Congress Partys Constant failure to either Reform or Rationalize its Spending Patterns in the last 5 years. The Latest News on the Asset Stripping Side which The Finance Ministry is undergoing is that they are planning to steal from the RBI as well Just so that the Red Line on Fiscal Deficit isnt crossed.... livemint/Politics/nIVtPJ3z1NQtNd6t38KjQO/Finmin-seeks-interim-payment-from-RBI-to-contain-deficit.html Just for Fun;I thought I would share some Data on the Governments Earnings and Spending in the Current Financial Year(which will finish next month). Total Earnings from Direct & Indirect Taxes- Rs 12 Lakh Crores. Total Spending on Major Subsidies [Oil+Fertilizers+Food+MNREGA+Sugar Export ]- Rs 4.5 Lakh Crores. Basically,which means that a full 38% of The Government's Sustainable Earnings (from Taxes);are spent on Non-Productive Assets AKA Handouts just to keep the Image of Taking Care of the Poor Alive. [Divestment and Auctions are not a recurring Revenue Stream by any stroke of the Imagination ] Where is the Money going to come from for Education,Healthcare, Infrastructure, Government Salaries, Pensions,various other Minority/Women's Oriented Schemes (that the Congress Party is constantly Tom-Tomming on TV)going to come From? Most importantly where is the Money for Running the Government to do the Right Thing which Mr.Kejriwal constantly harps about going to come from? Who is going to explain all this to Mr Kejriwal and his AAP? Its so much easier to do constant Nautanki and Keep Shouting at the Top of your Lungs(or Coughing as AK is currently doing) about Corruption! Corruption!!! Honestly,I am quite Prepared for an explosive Time in India post the Current Lok Sabha elections especially if (as I strongly expect); the NDA finishes with less than 230 seats. In that scenario,they will have to depend on atleast two of the Unpredictable Trimurti to establish a Majority in the Lok Sabha[Amma aka AIADMK,Didi aka TMC & Naveen aka BJD]. I dont think (or expect) Narendra Bhai Modi to take that chance/risk.He definitely has no interest in becoming another Mauni-Baba aka MMS.He would rather sit outside Government and let the Third Front propped up by a broken and Brittle Congress Form the Government at the Centre. We will see a situation of Musical Chairs for PM then aka Kissa Kursee ka... Thats when the Fun will start. first the ratings Agencies will Downgrade India to Junk Status then FIIs will stampede for the exits big-time from Indian Stocks and Bonds.Consequently RBI will have no choice but to raise Rates Sharply and Impose Harsher Capital Controls to try and desperately retain some of that Money inside India.Government will become even more Anti-Business than it already is by Nationalizing whatever it feels like left,right and Centre.... The Rupee will crash past 75 vs the USD ,Petrol will cost more than Rs 100 /Litre and CPI for all practical purposes will go past 20% Per annum. Dont worry ;we have seen this situation play out time and again first under Madam Indira Gandhi in India,and today in Real-Time in Argentina and Venezuela. Just Grab your Popcorn folks and watch this Show with the Best seats in the House!
Posted on: Sat, 15 Feb 2014 00:43:11 +0000
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