Inflation in India: a compilation of comments

Last Updated on

Last week I posted a rather non-technical take on Inflation in India: Will it ever decrease? The  post triggered many interesting comments

I also received some interesting responses on Linkedin. Here is a compilation of comments from various Linkedin groups.

~~~~~~

Author: Jyoti Kumar, Director- Development (Co-founder) at Bazaar Analysis Pvt. Ltd

Inflation is simple demand supply game. GDP/GNP (nutshell whatever we produce) of country is on one side and supply of currency on the other side. On GDP/GNP side we have multiple problems. Political reasons are on the centre. But, we should also blame our social or cultural part too. In some states politicians are distributing free electricity to farmers at cost of killing manufacturing units then on some other states they are failing to collect the electricity bill in fear of losing popularity and so, poor supply of electricity and no growth of industries.

At moment we have a major amount of assets blocked in half backed real estate projects. In 90s we had really need of real estate but today it is over supply and government never realized this to stop diversion of money in this sector on the right moment.

Our service sector just need 0-6 year experience people. Beyond that they don’t have high quality work and their resource become costly for them. So, silently they are dumping people beyond 6 year of experience and our government has yet to realize we are going to face major unemployment issue with people having work experience (unlike till early 90s we had unemployed with no experience)

In the mean time we have killed our conventional engineering and just converted all talent to software engineers.

As a society we need too much security and retail investors have blocked their 2/3rd investment in fixed deposit and stupid insurance linked investments that money almost not available for growth of the industry.

inflation in india: insights and c omments
Photo credit: tico_24 (Flickr)

Our investors’ community never want to take a risk or judge the concept at idea level (whatever they claim to do so). They want to put their penny only on the idea which has started yielding. We don’t have investors’ community like who funded Amazon.

Let us come to the other side of the equation. For currency we have copied the fiat currency model from US. We are printing and distributing currency without accountability. In the case of US, whole world is trading crude oil with US$. Virtually, gulf crude production is getting added to GDP/GNP of US. So, printing of extra currency is balancing out. However, we are printing much more than our own production.

Conclusion: Can we control inflation? Yes, we can because we have all resource and talent to do the same. But, we need change in political setup, priority and our own attitude.

~~~~~~

Author:  Harjeet Singh Kalra, Guest faculty, Management studies at Panjab University, Educational Institution, Chandigarh

Keep the exchange rate under control by keeping the economy open to foreign investment which will keep up the inflow of $ and this shall enable us to meet the demand for $ for import of oil and also keep the oil prices from rising in rupee terms. Rising rupee costs of imports(oil) adds to inflation

~~~~~~~

Author: Division head of an AMC (not sure about AMCs social media policy , so don’t wish to name the author)

Good one and probably reflects the general sentiment…inflation never seems to come down….only observation to add….even good rainfall is not enough to bring down inflation as can be seen amply from the recent sharp rise in onion prices in spite of abundant rainfall …….moreover due to subsidies (again the major culprit) and skewed crop sowing pattern (due to MSPs again determined by govt) the food for which demand is growing like oilseeds, pulses, proteins etc we are not able to increase the supply

~~~~~~~ 

Giovanni Chiampesan suggested (in the post) that I watch a very interesting video by Amercian economist, Milton Friedman on inflation.

Giovanni says, “Inflation is a purely monetary phenomenon caused by an excessive supply of money. Your new head of the Bank of India should be able to curb it since he’s from the Chicago School. See  How to Cure Inflation

This webpage has simple and illuminative description of inflation:

“Inflation results when the amount of money printed or coined increases faster than the creation of new goods and services. Money is a “token” of the wealth of a nation. If more tokens are created than new wealth, it takes more tokens to buy the same goods.”

The same video is also available on youtube

 ~~~~~~~ 

I would like to thank all readers for sharing their insights. I understand that it is a significant expenditure of your time and effort. Thanks to you I understand about inflation so much better.

Do share if you found this useful

About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of freefincal.com.  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

Do check out my books


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

5 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *