Inflation: Indias inflation is not the same animal as in Europe and USA . Those are matured markets, where all systems are in place. The Central banks there can control inflation by tweaking money supply and interest rates. Here in India we have under developed institutions and huge bottlenecks in everything. Add to this the governmental controls over markets by way of central marketing agencies which buy from farmers, producers, etc and stock and store. The systems like Ration Cards have long outlived their purpose which was to provide low cost basic in times of shortage. India is now abundant in resources and produce. These bodies only act as speed breakers, lead to corrupt practices, let food go to rot . The farmer here gets only about 10% of what the user/ultimate consumer pays, the rest is added by the system. So to contain inflation in India we need to focus on the supply side economics rather than throttle the end buyers. We need to identify all such blocks created over decades for different times but now are fiefdoms of various authorities. Oil led inflation is also very high in India, we are probably the most taxed country in petroleum products, creating direct and indirect and artificial increase in costs
Posted on: Sat, 19 Jul 2014 07:28:10 +0000
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