Byapaar.com – The Indian Business Blog

“I have been begging pardon from my readers again and again for not writing on this blog that now I have lost my face even to do that. Anyway, I consider this blog as some sort of personal and intend to use it to express my views on certain topics from time to time. As I have to maintain a regular job and also spend time on my commercial web properties, the posting won’t be regular though I want to write on a daily basis. So…….. ”

The other day we, colleagues at the school were debating on the current single most important problem faced by us, the common people – ever increasing rise of prices of essential commodities! One colleague, who is a die-hard supporter of a Left party was saying that he attended a party meeting the day before where a member of the party’s central committee attended and told the gathering (general public) that if the Central Government of India used the Rs. 900 billion for subsidizing food grains instead of helping industries, poor people of the country (those Below Poverty Line or called BPL) would have got rice @ Rs. 2/Kg. Very true – why help the rich and deprive the poor?
Or is it?

If the industry goes into recession – then the economy of the country is bound to collapse – don’t you get that?

Almost 65% of the people are engaged in agriculture – but how much does the sector contribute to our economy? One fourth? On the other hand industrial sector (taking service industry together) is contributing the bulk of the GDP.

So first thing – first. We must secure that our economy is in sound health, revenue to the government coffer roll in – only then we could spend them in development and social sector. It is not that the government is keeping people hungry. Even without those 900 billion Rupees that the Left are objecting (they are never industry friendly – say what they may) – Indians holding BPL cards are still getting rice @ Rs. 3/Kg.

Regarding the rise of prices of essential commodities – many political parties including some allies of the current UPA government are holding the Congress (I) responsible. But what can the government do? I think it should just regulate and not control the rise of prices which is natural.

Come to think of it – 25 years ago, I was a high school student and my teachers were getting a salary of around Rs. 1500/- per month. Rice was being sold @ Rs. 2.5/- per Kg. then. Now as a teacher I get roughly 20 times that my teacher used to get. So, salary of my post increased 20 times in 25 years where as price of rice (most essential commodity) – increased only 7/8 times depending on where you live.

And if prices of rice, wheat, vegetables or other essential products are not increased proportionately – then how can you help those poor farmers who produce them?

The other day I was reading a newspaper report about a grape grower’s suicide in Maharashtra because he was burdened with loans and although he was having bumper harvest, still he could not cope with the changing economic situation.

While prices of everything rose including grapes in the open market, the price of that he was getting from the middle-man didn’t change in last ten years. So he didn’t get the benefit of rise in price and was left behind the economic BOOM that our country has been witnessing.

Come on guys – be pragmatic and not get extra selfish. The rise of price is just a natural phenomenon that comes with rapid economic growth. Our system is not like China where the government can regulate strictly.

Just think rationally, think how much you pay for a kilo of grapes – and think about that grape growing farmer who was still selling them for Rs. 10/kilo. If we are really serious about alleviating poverty from our country we should have a pragmatic economic approach.

Our so called leaders – rather than giving tall lectures should help these type of poor farmers by developing a good transportation system, good storage system and also think about some kind of subsidy in case there is drought.

It was supped to happen!

When economies around the world were either in recession or contraction, Indian government has been projecting a GDP growth of more than 7% for the fiscal of 2008-09 which many economists and analysts termed as over optimistic. With falling demands in major markets around the world, the only way to keep a high growth rate is to create more demands in the domestic market and Indian government has been trying it through three-staged stimulus package by reducing interest rates and releasing huge flow of funds in the market.

It seems the packages were not timed well as third quarter (ending on 31st December from 1st October) GDP growth fell to 5.30% – thus falling below 6% for the first time since 2003. What is more worrying is the fact that farm sector contracted up to 2.20% and manufacturing sector fell 0.2% from the level during same time last year.

As a result of this, stock market fell by 0.7% during the day and Indian Rupees breached the record Rs. 51 barrier against the Greenback amidst sustained pressure for the dollar by foreign banks and oil importers.

With the announcement of this economic performance, eperts are having varied opinions. Some economist like Sherman Chan of Moodys believe that the governments projection of over 7% growth is over optimistic and it is high time the projection is revised. On the other hand, Pawan Kumar Bansal, the junior Finance Minister says the government still expects GDP to grow at over 7% during current fiscal. This group is of the opnion that the stimulus measures are yet to have major effects and the economy will recover during the 4th Quarter.

whatever happens, Industry is of the opnion of more rate cuts by the Central Bank as they need more liquidity in the market to take full advantage of stimulus packages announced by the government recently. This has necessitated more with this announcement of poor performance by the economy. Most believe that, if the economic growth slips below 6%, there will be huge job losses and India need to maintain a GDP growth rate of 8-9% in order to dent against the huge percentage of its people living below poverty line.