Saturday, 9 January, 2010

Inflation is the gift we get for our Gov.t's Inaction

Now what to do you make out of this:
India exports Iron-Ore to China at prices cheaper than whats available to Indian co.'s thus our Steel co.'s find an excuse to Price Steel at 40% more than what is available in Chinese markets.

Hike in steel prices lead to a spiral effect and lead to higher prices of inputs to various industries across sector an hence Inflation. Now current inflation rates are around 7% (Dec '09) but we all know the real inflation of essential commodities is somewhere around 15% at the most conservative estimates.

So what has changed in the past few months or days.. Well steel price's have increased.. Tata Steel increased their prices by 2 Rs/kg and Sail by 1.5 Rs but for the actual user it's easily in the range of 4- 5 Rs increase before the various taxes.

To prove my point they same thing happened precisely around the same time last year. In Jan'09 steel price increased by about 10% the real effect in the retail market was more than 45% and if we scratch our brains the inflation rate shot of to over 10%.

But the difference between the Hike in prices by steel co.'s is totally different. There has not been a real increase in Raw Material prices ( at least not to a large extent) and this time the Increase in prices will lead to a long term consequence. More reliance on imports form China.
As if it was not happening .. just that our own industries will find it hard to fight out the downtrend two years in a row..
All this does not bode well for the labor market as well as this is gonna fuel further unemployment..

The prices of essential commodities has been going up for past 3 months..But the Govt thinks by printing the cheap wholesale prices in newspaper will mean that you an me will get to buy them cheap.. i mean there is nothing concrete that they are doing.. i heard Abhishek Sanghvi saying that NDA this wrong that wrong n some BJP guy pointing UPA's subservient polices with USA during a debate about rising food prices.. you can well imagine how serious they are in the Parliament..

So we are back in the vicious circle where practically 70% of India's population can't afford the sweetener in their tea let alone the tea itself..
Where the development is held back for the industries who now fight to survive let alone provide new jobs..
n all this because of our Government In-Action...

I'm not favoring protectionist policy but may i say some cunning policies will do us good....

for starter's can u let the damn Trucks into UP so that Sugar can become sweet again...
If you are really serious about the farmers ..give them a better price .. not the traders..
n Mr. Pawar stop shouting on the roof how many sugar you going to import.. for it just jacks up the international prices...
n a simple thing as a talk with Steel co.'s set them to tone down.. Tata has its own Iron ore reserves but still cries if the prices go up..

Till then I'll have coffee no sugar please..I'm cutting down..not my diet..my expenses..

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