Common man and Inflation

With the food inflation touching the high of 14.4% for last week of 2010. Do the common man has to really worry about inflation? Do the Govt can really control the inflation? Is it justified to say Inflation is high at 10%? This were a few questions revolving in my mind.

1.Do the common man has to really worry about inflation? I felt why should a common man worry about rising Inflation rather he should think how he can really earn better and beat the inflationary effect on his Income.It has been the trend for the prices to rise at regular intervals otherwise salaries would have never gone up from Rs 500 to Rs 50000 from 30 yrs back from now.

So the common man should demand for higher wages for his services, business man should demand higher prices for his produce and beat the inflation this way our economy is structured with the demand and supply gaps.

2. Do the govt can really control the prices? No not really since the measures on the monetary tightening will only have adverse effects on the economy in the long run and only increase in production can help to certain extent. The economy or the inflation is co-related to the demand and supply gaps. And it is driven by the public depending on the supplies of the given product.

The inflation is again driven by all of us by demanding higher for our produce or for our services or urge to spend more as per increasing income levels, which creates a demand supply mismatch.

3.Is it really justified to say that Inflation is high at 10%? not really since the inflation is co-related to the demand and produce it cannot be kept under control.Since we are ready to pay any price to acquire the same product its cost is increased. Simply it proves we have more money to buy the same product at a higher cost.

For example if a house is sold at the 10 times of the quoted price then it shows that there is a demand for that house where inflation can be 500% due to lesser supply. In the long run it is good for the economy since the earnings of our employees will match up with International peers which will help us to attract better talent for us rather than losing it to the developed nations.

So all of us should demand for higher pay packet for our services then only we can beat the inflation since No govt has been able to get the inflation to a nil. And if they would have also got it to the nil then salary of a avg employee would have remained at Rs 500 rather than 50k.

So there will be gradual increase in the income as per the inflation and if you are able to get a double increase in your pay packet compared to inflation then you are succesful and would not be fearful of any inflationary effect.

So cheer up earn more and spend more is the funda and compete with the internatinal peers...

Oil at 100$ a minor abberation

Oil is expected to touch a high of 100$ and even some predictions that it will cross above 100$ to reach 120$ and leading to the all time of high of 150$.

But the concern is can the world afford the oil prices above 100$ to continue to grow. The answer is NO. If it cannot then the oil prices has to come down and it will happen. Oil may stage a march towards 100$ but will shy away from the three digit figure and expected to trade in the range of 75$ to 90$.

The current oil prices is supported by the growth in the economies of various countries but will not cross 100$ since the prices are not driven by only demand it is also the effect of the bubble created.

Another factor which will keep the oil prices under check is the strong focus of many countries towards advancing in the renewable energy specially the Solar and wind energy which are available in abundant.So don't be panicked it is the trend of any commodity to rise and fall as per the demand and also the speculation by marketeers.Do write in your views on the above topic.

FDI in retail

I have been reading in various news papers and journals regarding pros and cons of allowing FDI in retail sector. With many views supporting as well as opposing the FDI in retail in India have been written. But I don't see any reason why govt has to call for so much discussion on a subject which is widely accepted as a way of retailing across many successful developed countries.

Still I would like to join the panel and share my view point on the subject. I am a customer of organized and as well as unorganized sector of the Indian retail pyramid and I strongly feel that the sector should be opened up for FDI. Before I put in the reasons for supporting the same let me make everybody understand that there is no comparison and competition between a Small Kirana and a big departmental store. Since both have there own unique markets and expertise to operate.

Without getting into the detailing for supporting the same let me just put a few important points for why it should be allowed.

1. First and the foremost reason for allowing FDI in retail is to support the economy with more tax revenues for the govt in the form of Income and other sales tax from the earlings of the retailers and the consumers.

Around 9 out of a total 10 times when I bought a product from a local retailer I have never been given a proper receipt for the purchases I made at a shop by which the traders evade sales tax as well as personal Income tax to be paid to the govt here by earning a black money, were as a salaried class employee can never do. This itself is enough to cover our all types of deficits in the system and reduce tax brackets across various income levels which again will encourage public to pay tax without evading it.

2.This will directly help the farmers since the bigger companies with their deep pockets and stronger control over businesses help farmers to cultivate and produce better at a minimal cost resulting in a win win situation for both farmers and the retailer as well as to the customers.

3. This will reduce the hoarding and black marketing by intermediaries like traders and wholesalers who only drive the prices higher. And also this are the people who have stronger nexus with bureaucrats and politicians in creating a bubble of price and making money for themselves.

4. Also one of the major reason to allow FDI is it will help employment across the cities , towns and villages with the same or lesser physical work they put in. Currently this labour is employed in the markets working under harsh conditions at the place of work with a very low pay. This will also result in employment for rural youth other than the agriculture. Over all it helps in driving the economy at the grass root level of the country.

These were few reasons few positives to start with and I am sure people have many negatives but I would say let us give a philip to it and address any issues if we face in the future. As far as foriegn companies as a competition to indian counterparts , they will have there own challenges in a country like our to face with where our companies far better than they are.

So I am confident that we will gain across all the societies and help farmers and consumers as well.

One important suggestion always demand for a tax receipt for every product you buy in the market be it for Rs 1/- or 100/- believe me it will help you , me and the country. If any shop owner refuses to give one simple change the shop and also recommend your friends to buy from a shop where the receipt is given.

So practice it and do write in your feedback and views if any on the above subject.