The way to fight inflation: Throw the UPA Govt. out

via Dr. S.Kalyanaraman published on June 21, 2008


I don’t think this should
be a moment of silence for the opposition allowing the UPA government to fall
apart by its own contradictions and the state of rot created by every minister engaging
in a secular loot of the nation’s wealth and resources. I think this is a
decisive moment when every person concerned about the impoverishment of rural India should
raise the cry of revolt and ask for the immediate dismissal of the UPA
Government with or without Karats.


Inflation or price rise is
simply a monetary phenomenon. Inflation is directly related to the money supply
in the economy.


With the influx of
fraudulent participatory notes (P-Notes), the rich Indians have become richer
at the cost of poor people of the country.


With the influx of P-Notes,
too much money has been brought in (whitening the black money and bringing in terrorist
money and money-launders’ money) to chase too few stocks of scores of shares
which constitute the BSE Sensex. Sensex shot up from 2,900 in 2003 to 27,000 in
2007. Too much money supply has devastated the financial system, enriching the
rich and those who should be tried for economic treason.


With such bloated
moneys in the pockets of the rich, the whole-sale price index has shot up since
too much money has been chasing the almost same quantum of goods and services
produced in the Indian market.


Wholesale Price Index
consists of 435 items and has three broad categories. They are Primary Articles
(weight of 22.0253), Fuel, Power, Light, and Lubricants (weight of 14.2262) and
Manufactured Products (weight of 63.7485).



http://www.thehindubusinessline.com/mentor/2007/03/05/stories/2007030501701300.htm


Clearly manufactured goods
are the dominant component of the inflation index. The present level of
inflation of about 15% to the consumer is caused by the decline in
manufactures. Coupled with too much money supply chasing too few manufactured
goods, the inflation has reached a galloping state.


The
three persons
responsible for this state of affairs are: P.Chidambaram, Manmohan
Singh and
Sonia Gandhi who have introduced bogus non-productive, expenditure
schemes such as National Rural
Employment Guarantee Scheme, Agriculture Loan Waiver Scheme, P-Notes
devastating the stock markets; these schemes have created more money in
the
hands of consumers with little increase (in fact, decline) in levels of
production
and services. Sonia is misleading the nation by blaming non-Congress
state governments, Manmohan the super-economic-czar is acquiescing in
the rot by keeping quiet, P-C is clearly misleading the nation by
citing global food prices
or global fuel prices without owning up his responsibility in
increasing the
money supplies and throttling the decision-making by RBI to rein in
inflation
in the financial system.


The
Current Account
deficit in the current year’s budget (excess of expenditures over
receipts) is a cause for serious concern. The false figures
of balance of payments surplus with surplus dollars in the BOP account
will get
wiped out when the FIIs pull out their participatory-note monies and
bring the
stock market tumbing down. These BOP amounts  can NOT offset the
current account deficit. Only one measure will; rein in the
unproductive expenditures without misleading the people  with
announcements of cancellation of foreign travel jaunts by a few
ministers.


Don’t wait for elections.
RBI should intervene forcefully, shaking off the tentacles of the Finance
Ministry. The President should act to dismiss the rotten UPA Government
forthwith, and order immediate elections, nuke deal will be a bonus for the
energy industry provided it is put to good use by creating 100 nuke plants in
the next 10 years on a fast track.





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