Friday, August 15, 2008

Fueling the flame?

It is high time for every nation across the globe to be more cautious. The main cause of the concern is the inflation rate of our country which raises to two digit mark and crossing its 13 years high. As per the saying "Wise men learns from other experience", we need to learn from others around and also from the history.

There is an african country with most billionares yet starving for food teach many lessons to rest of the world. Imagine their position, their inflation rose to more than 6 digits (inflation >100000). The cost of the Paper worth more than their currency. Thats the real worst case. Though we can quote thousands of reasons for its cause, acting on the solution is most ultimate and vital. Its as simple as not to point the hole in the boat but to fix it, atleast not for others sake but to keep ourself in a safe place.

The supply is not matching with the demand. Government and its central banks trying with to take stern action with repo rate and CRR hikes. Is just the absorbing of money in the market cools down the burning fire? I dont think so. More investments on farming and increasing the food production may be the first and foremost action item. But its not as easy as it looks. Farmers dying in many parts of the country without food. With many other jobs in hand, government is sponsoring money in installments. By this time, they are left with two choices in their hand which I believe that they can do it more efficiently

1. Go ahead with reforms to curb the inflation and have it under their control.
2. Give away all the possible free bees (which may add fuel to the flame)to attract people to have a fresh start later in their next term.

With the 6th pay commisions approval at this point of time, i believe they are fueling the flame of inflation,(may be with the belief that they can calm it down in the next term) and waiting to catch the crane with butter on its head!

No politics only about policies.

Disclaimer:All that are mentioned above are my own imaginary views and ignore if you feel contrary to it.

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