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Inflation - Who is responsible?? (Page 4)

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TIMONN

Senior Member

TIMONN

Joined: 21 June 2008

Posts: 419

Posted: 22 June 2008 at 6:22am | IP Logged

Originally posted by Anuradha

Hi All

Today the inflation has gone upto 11.05 Ouch For the past few months inflation has been too high and the public is suffering a lot... Today it was shown in one of the news channel that one KG of tomato costs 100 Rs Confused Petrol, Diesel, LPG, Oil prices have been increased.. Not only that, due to all this, the day to day grocery prices have also been increased and all this is affecting the sensex.. The sensex has dropped to 350 points Ouch  The worst sufferers are the daily wages workers...true

higher inflation means higher cost of living and hence lesser savings. Lesser savings mean lesser money inflow into the stock market . Lesser money means lesser demand for the securities available in the market and hence a dip in Sensex points! And thats just the demand and supply side.



So, who do you think is responsible for this inflation??

I agree with almost of all of the previous answers. What I can add to is Iraq used to produce 83% of the crude and the remaning countries combined only managed 17% . America's interests were  after the crude reserves in these countries .LME (london metals exchange) regulates the metal prices worldwide and america regulates the crude prices ,the only problem with that is niether of the nations actually manufature the things they regulate . Inflation in india can be directly linked to the pertol prices n rising dollar.Aside from the subsidies another issue is a passing government you never hear of fuel hikes in an election year do you ?. they just continue to give the subsidies to get maximum votes and the incoming govt starts with a huge deficit .
got to know this from a yahoo fren. correct me if im wrong.


The government of India has almost given it up.. The Prime Minister is the former governor of RBI, yet nothing is working in order.. Is it the fault of the government?? partially yes. whenever a problem like this comes up, the opposition party attacks the party at power. so there is a lot of politics going on and the left partners never give up any chance to heat up an arguement to show down upon the other government. instead of thinking of the serious problem the folks are facing, they become more concentrated on how to get into power by using these opportunities.
like rajiv pratap, BJP spokesperson  said" the PM and finance minister should quit and spare the country of their illustrious service"
 
 If so, what do you think the people must take as an immediate step?? Can we as normal public do something to reduce the inflation??
immediate step should be taken by the government to see that the farmers are not exploited as they form the backbone of our country.
steps by us, may be we can use more of public transport system. this would give us a double benefit. less pollution and good environment.
honda is going itz way introducing a "hydrogen car" which would emit steam!! letz see what happens to this new discovery.

this invention  should be made affordable through immense research and development. This not only reduces our dependency on global oil prices, but also do some good to our environment keeping it green.


RBI mention few steps itz going to take-( this part is purely from net)

Stressing that its main objective is to maintain price stability and growth momentum, Y V Reddy, governor, Reserve Bank of India said supply-side measures taken by government to tame inflation will yield results in the coming months.

''Overall, some abatement of global prices, indication of better domestic supply and addition to our buffer stocks, along with a series of measures already taken by government on the supply side are expected to yield results in the months to come,'' Reddy said.

In medium term, however, the National Food Security Mission, launched about two years ago, should yield positive results.

''RBI's major objectives are to maintain price stability, and maintain growth momentum, especially employment generation. In this endeavour, agriculture plays a critical role since agricultural commodities have a relatively significant weight in price indices in our country and also in anchoring inflation expectation,'' he said.

Reddy noted that with rapid growth in the country, food consumption will rise in an unprecedented fashion and emphasised on improving the food supply, which he felt was possible because of enough scope in raising the productivity level.

''With rapid growth in our country, the food consumption will rise in an unprecedented fashion since we are over a billion people. The food basket will also change. We have to augment the food supply within the country,'' he said.

''As half of our workforce is dependent on agriculture and as there is enough scope to increase the productivity, there is no reason why we cannot ensure food security for the country at a minimum,'' he added.

 thank you so much for making this wonderful post. Clapi learnt a lot through it.


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missmasakalli

Goldie

missmasakalli

Joined: 17 January 2008

Posts: 1619

Posted: 22 June 2008 at 10:16pm | IP Logged

Originally posted by Donny COMB

Originally posted by jinniezz

Only and only crude oil is the ultimate cause...


There is never one sole cause for inflation. A lot of factors combined together lead to it.

Yes you can say that the rise in the price of crude oil can be 'one major' reason, but it cannot be the sole reason for the rapid rise in rate of inflation.

Hey i knw there are  other factors also..like rise in commodity prices.....definitely.....But in India the most important driver of current inflation ie 11.05% is relentless  rise in crude oil prices.U knw crude oil prices have increased by 37% since the budget 08-09 was presented on feb 29,2008.This is what our Finance minister of India said in one of his statements.... let me correct myself...crude oil is the pure cause for current inflation...i mean to say itz the specific driver...



Edited by jinniezz - 22 June 2008 at 11:27pm

missmasakalli

Goldie

missmasakalli

Joined: 17 January 2008

Posts: 1619

Posted: 23 June 2008 at 12:10am | IP Logged
Originally posted by .xganga.x

Originally posted by jinniezz

 Hi  x.ganga.x.

Only and only crude oil is the ultimate cause...
Here is the proof...

http://www.commodityonline.com/news/globalview/Inflation-hit -India-China-lose-sheen--investors--9676-3.html

Dont we need diesel for irrigation purposes,...& to run machinery,tractors et al...& for transportation purposes.....

Hey,

I still stick to my theory of it being caused by the ecnomic slow down, which has caused oil prices to rise. Inflation is just a sign of this happening. As i said earlier it happens every 8 years or so and can't be changed. And we do need it, but it is not the ultimate cause to inflation. On the June 27th we will find out if we are in a Global Recession or not!

?xXx?

sorry that was just a random fact.

I appreciate the theory but I dont wanna stick to random facts..LOL

x.sunayna.x

IF-Dazzler

x.sunayna.x

Joined: 27 May 2008

Posts: 3775

Posted: 23 June 2008 at 2:18am | IP Logged
yeah, fair enough!
?xXx?

jagdu

IF-Dazzler

jagdu

Joined: 05 October 2007

Posts: 3139

Posted: 24 June 2008 at 2:47pm | IP Logged
Why there is so much discussion on this subject is because of the economic figures that took place this month. If India's wholesale price index, a key measure of inflation jumped to 11% for the week ending June 7, it could not have taken a worse turn than in more than a decade.
Will RBI raise interest rates from the present 8% while the top stocks in the country are still falling in the Mumbai stock exchange? The Indian stock market is trading at prices seen in 2007 and has fallen 28% in 2008. How about 2006? Presently the stock prices are about 55% higher in 2008 than they were a couple of years ago.

http://www.india-forums.com/forum_posts.asp?TID=941252&TPN=1

kabhi_21

IF-Rockerz

kabhi_21

Joined: 25 January 2006

Posts: 9942

Posted: 24 June 2008 at 8:32pm | IP Logged

Originally posted by jagdu

Why there is so much discussion on this subject is because of the economic figures that took place this month. If India's wholesale price index, a key measure of inflation jumped to 11% for the week ending June 7, it could not have taken a worse turn than in more than a decade.
Will RBI raise interest rates from the present 8% while the top stocks in the country are still falling in the Mumbai stock exchange? The Indian stock market is trading at prices seen in 2007 and has fallen 28% in 2008. How about 2006? Presently the stock prices are about 55% higher in 2008 than they were a couple of years ago.

http://www.india-forums.com/forum_posts.asp?TID=941252&T PN=1

But raising the interest rates by RBI will have negative impact on the stock marketConfused

kabhi_21

IF-Rockerz

kabhi_21

Joined: 25 January 2006

Posts: 9942

Posted: 24 June 2008 at 8:44pm | IP Logged

RBI hikes key rates, loans to be dearer

PTI | June 24, 2008 | 21:42 IST

Challenged by unrelenting inflationary pressures, Reserve Bank on Tuesday announced stringent measures of hiking mandatory cash reserve of the banks and its short-term lending rate to them to suck up an estimated Rs 20,000 crore -- a move that could make loans dearer for housing, car and personal expenses as also to the industry.

The announcement of hiking cash reserve ratio by 50 basis points and the short-term lending (repo) rate by a similar margin comes close on the heels of RBI Governor Y V Reddy discussing with Prime Minister Manmohan Singh and Finance Minister P Chidambaram the prevailing inflation scenario.

Reflecting the Finance Ministry's view that monetary policy would be the first line of defence against inflation that has surged to a 13-year high of 11.05 per cent, the RBI after intense consultation today pronounced the new measures, part of which would be effected in installments.

In a precursor to raising the CRR from 8.25 per cent to 8.75 per cent in two installments beginning July 5 and the repo rate from 8.0 per cent to 8.5 per cent with immediate effect, Reddy had said on Monday that the apex bank would do every thing to ease the inflationary pressures.

Expressing concern over rising inflation, RBI said, "Besides oil prices there are some underlying inflationary pressures impacting inflation in India."

The Reserve Bank said the move is "somewhat painful" but timely contraction of money supply has to be viewed in the context of new reality of high and volatile energy prices, which is not a temporary phenomenon any longer.

Justifying the move, the central bank said, "It is important to ensure that generalised instability does not develop and erodes the hard earned gains in terms of both outcomes and positive sentiments on India's growth momentum."

RBI's decision will have an impact on interest rates on various loans as is evident from bankers' reactions. Commenting on the impact of RBI's step, PNB Chairman K C Chakrabarty said prime lending rate could go up by 50 basis points. "All the loans linked to PLR like consumer loans, home loans, personal loans are bound to go up. At the same time, deposit rates would also be increased."

HDFC Managing Director Keki Mistry said," if the cost of funding goes up, we will pass on costs to our borrowers."
However, IBA Chairman MBN Rao said banks would wait for sometime before increasing home loans. According to United Bank CMD P K Gupta, banks may have to go in for a hike in interest rates even before the monetary policy, scheduled for next month. However, the quantum of increase will be decided after assessing the situation and the need of the individual bank.

UCO Bank CMD S K Goel said it does not mean increase in rates across the board. "We can adjust our short-term loans by half a per cent."

According to Indian Bank Chairman M S Sundara Rajan, "We have to look at the PLR next. The bank is likely to take a decision on first week of July. Accordingly, deposit rates would also be hiked."

Industry chambers fear RBI's step may also harm India's economic growth, particularly manufacturing sector. Ficci said the move would affect the manufacturing sector, which is already facing slackening due to high interest rates. This would also affect overall rate of growth of the economy.

kabhi_21

IF-Rockerz

kabhi_21

Joined: 25 January 2006

Posts: 9942

Posted: 24 June 2008 at 8:51pm | IP Logged

While the inflation in the economy is a product of food scarcity and oil price hike, the government is seeking a solution with interest hike, that will reduce demand for houses and cars in about 2-3 years time. It will also increase the cost of lending to agriculturists who may not get the money for harvesting in this season having more impact on agriculture and more scarcity of food. It will aslo weaken the already dull stock market further with banking, real estate and auto industries being hit hard. Auto industry is gonna hit with oil inflation and also higher interest for finance. Why did i buy stocks of tata motors CryLOL.... well i am not worried.... they will come up some time.

I felt the government shall first look to cut the taxes on the oil products reducing the price of perol and gas. Shift most of the vehicles to CNG rather than petrol. Look how we can improve the productivity in agriculture and give some incentive to the manufacturing industry who has gone into so many expansions in recent years. If the government does nt give this industries some hand at present its no longer we will see them in red and unemployment on increase

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