The Storm Of Raising Indian Economy

The other day, the auto fellow charged almost the double of what it actually costed. When asked why , he replied arogantly – “ When you people have so much money to spend for your luxuries, why not paying more to us too”. I was shocked by his retort and have to give him the money he asked as we did bargain before.
But that incident made me think that this is the way it is everywhere, as the same is the case with every other product that is available in market. . The increase in money supply is driving the surge in prices, Inflation. Offlate inflation has been uncontrolled and now it s like a perfect storm, a storm that can wipe of the economy unless proper measures are taken to abate it.

Although, the government softed the people saying that the current inflation in the country is quite inevitable as the country’s economy is in a surge, there are definitely some measures that could put a stem to it.

Firstly Indian Inflation is WPI(Whole sale Price Index) based and has many flaws in its calculation. Many countries (almost all) in the world use CPI rate to measure the inflation. This has to be first sorted out.

Secondly, the unhealthy competition that currently exist between various companies in the market has to be controlled by appointing cartels. There has to be an efficient regulation of competition in industries especially like Steel and Cement, to get some control back from their soaring prices.

The CRR has to be increased if inflation crosses 7% so as to reduce the money supply. Although , this has a slow affect as the scheduled banks have enough reserves even now.

Although Global inflation is one major reason, some of the shock absorption would have been possible with an efficient PDS (Public Distribution System). Consider for example Petroleum. India has a history of shielding consumers from global price shocks.

Also, Hoarding of items/consumables would be very useful at times of crisis(lets say cyclones etc) as a measure to control any inflation. Take for example,
Bangladesh ,which had been very successful in ensuring a buffer stock of food grain, despite the disastrous cyclone, through effective monitoring and advices.
'If a country like Bangladesh can do it, why can't we?'

One More alarming fact is that in India there is a lot of Unmeasured inflation . That is the current inflation which is 7 % might have been 8-10% if the inflation of many products have been properly taken into account.

Acting against soaring inflation should be done in an efficient way as it would affect the Economy.
So it’s high time Government to think of it seriously and act wisely before next elections to retain its position.