India: Tackling recent surge in inflation... Circa Sep 2010

This is just a continuation of my previous post in Dec 2009 Click Here

As feared in my previous post, the Indian Gov. has tried to hide its impotency against the rising food prices (and inflation in general) behind the innocuous step of monetary policy tightening. RBI has yet again raised the interest rate despite continued failure in taming inflation. But what can the Gov. do other then putting pressure on RBI to play with the monetary policy? Gov. has not done enough to meet the supply side challenges. In fact the food grains are rotting in the depots. The level of wastage is evident from the Supreme court's order to distribute food grain for free if Gov. can't store food grain (Click). This Gov. is trying to solve the supply side challenges through demand side tools. 

Below is an excerpt from my previous post which throws more light on the subject.

"... 

If you can’t prop up supply then reduce demand, sounds just right. However, I call it a pseudo solution as tightening monetary policy might not be an intelligent and effective way to tackle rising food prices.

First reason is the tools used for tightening monetary policy like interest rate, CRR, etc would take a very long time to actually affect drop in demand for food items. The trickle down effect is very slow as food lies far down the chain from where monetary policy starts taking effect.

Secondary reason is that the demand for food is still affected much more by consumption rather than investment. This coupled with the wide rich poor divide means that the major chunk of liquidity lies within the reach of rich few, who would not start eating more just because the cost of capital has gone down. Increased liquidity would have increased overall demand for food if the money would have reached the pockets of wider section of society, especially the ones who are consuming far less than a healthy diet. This is why a tightening of monetary policy may not bring in desired results, although it just might give a picture that the Government is at least doing “something”. Although this “something” will surely prove to be a serious blow to the much needed recovery process after the recent credit crunch.

Thus my request would be not to disturb the monetary policy...."

I believe that the Gov. has run out of all ideas as it shamelessly pursues the course of tightening monetary policy at the expense of our economy in order to fake a war against inflation...

Please read my earlier post below on the subject. (Click)

Missed posts...

I have missed to update couple of my blog posts here. But you can still read it by clicking the links below.
Couple of posts on Indian Infrastructure Sector

India: Tackling recent surge in inflationInfrastructure bonds finally

And this one about the inflation we saw in India in the last quarter of 2009. Remember this is an old post dated Dec 2009.

India: Tackling recent surge in inflation

Look forward to your comments.

UK Budget Deficit

I recently wrote an answer/comment on the burgeoning UK budget deficit and what can be done about it. You can have a look at Ning or Guradian .

Or click the read more button below to read the post here and also to see the pdf of the image shown above.

The Perfect Defence

This thought is an outcome of many doomsday movies that have accumulated in my head. If such a day is bound to come sometime, what sort of a defense should we build to see some specimen of human race through. Of course we have seen bunkers, walls, steel cabins etc. but we have also seen all of them getting breached. Now the problem at hand would get out of control if we don’t define the scope so.
Type of dangers /attacks possible…
1. Lets start with tough ones, Nuclear attack, hence extreme heat and pressure followed by radiation
2. Comets striking earth
3. Air in atmosphere getting toxic for humans to survive
4. Food in atmosphere gets toxic
5. Sun runs out of heat and light
6. Earth goes under water, completely.
7. Earthquakes, not simple 7 on richter scale ones but full fledged tectonic plates running over each other
8. SuperVolcanoes
9. Super tornadoes
10. Air borne and incurable lethal virus
11. Zombie Godzillas… :D
12. Extreme sustained heat, which will evaporate all water on earth (no seas or rivers, though u can condense steam to get water to drink)
13. And probably the toughest of the 16 to beat, the possibility of one of the guys in the chamber going nuts of being in the chamber for 20 years and killing everyone else including himself...
14. One dumb mistake from one of the 10 people on board... Like leaving the toilet flush open and running out of all water to drink... with Zombie Godzillas outside... :D
15. Ohhh damn and how can I forget intelligent aliens, hell bound to destroy those 10 humans in the box.
16. Hot male / female look alike but actually spies sent by me to fail the mission... Their weapon is just their looks and promise of a really amazing sexual adventure, like no one in the box has ever dreamt of... lol... well it sounds cheesy but the central idea here is how will you fight against greed and lust...


Well to make life easier, you can assume not all of them happen together. But the solution should be able to sustain human life in each of the above scenarios individually. I am in a pessimistic mood, so will let everyone die before trying… :D

But I am sure you won’t let me succeed so let the game begin… You can only use, presently possible technology and materials and can assume, that you just need to sustain 10 humans for 20 years for the danger to pass away. I have thought of a possible solution. But will post it later. Enjoy till then…