Indias unending Inflation woes !

If u haven’t noticed the crescendo the govt has been building on how it will control inflation to 5% by the beginning of next year, i dont blame u. In any case i think it is just a ruse or cover the pathetic performance of the govt in curbing inflation.

Inflation is Increase in cost of goods and services over a period of time. India’s annual rate of inflation, based on monthly WPI, stood at 10.16% in May 2010 as compared to 9.59% for the previous month and 1.38% during the corresponding month of the previous year. The govt has missed its inflation targets for the last 5+ yrs non stop, giving lame reasons for its gross failure.

The truth is that not just CPI inflation but also the  WPI which is a much broader index is in runaway double digits, the govt is finally conceding that it has spread from food to non food items (something that had happened some time ago).

India has been suffering the effects of inflation right since the first UPA term under the figure fudging P Chidambaram as FM who chose to put many a subsidy like oil bonds below the line . Worse as the govt is overstretched and has dolled out more populist schemes without any accountability than it can handle , and the fiscal deficit (expenses over incomes) has mounted , and was higher than what it was during the PM M M Singhs term as FM in the 90s and India had to sell its gold reserves and agree to tough IMF conditions.  The debt has also mounted to record levels.

As i see it :

1. This govt is Fiscally intoxicated. read

UPA-II’s fiscal intoxication

2. It is resorting to selling family silver and creative accounting or window dressing of its books of accounts.

Selling family silver to fund profligacy: S A Aiyar

3. The govt has no long term vision or  plan to battle inflation or its humongous subsidy bill or to get its act together . It is better to trust the sattorias(betters) and the rain gods and pray for better harvest and more commodity supply.

4. The PM does not fully control his flock of  cabinet ministers.

2G net closes around A Raja

5. The FM P Mukharjee talks both ways and sometimes assumes the role of the RBI Governer.

India won’t pause rate hikes for now, says Pranab at G20

Emergency rate hike in India? |

Whose ‘interest’ is it, anyway?

FM doesn’t want rise in interest rates

5. The RBI Governer is not quite sure if he is still a member of the finance ministry.

Interest rate rise obvious solution to inflation: Subbarao.

Subbarao Risks `Falling Behind’

Subbarao attempts to calm rate hike fears

6. Alls not well in the Agricultural ministry.

IPL scam most serious blow to Sharad Pawar’s power, credibility

(Why am i not talking about agriculture  or rotting grains in open NAFED godown or sugar scam and likes ?)

Expectations:

See more money going into gold.

See massive negative returns on fixed deposits and bank savings as the Inflation is well above the artificially controlled Interest rates.

See artificially stimulated Property markets and choppy Stock  and Bond markets for the short to medium term.

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