Tagged: Inflation

Has the country’s central bank ( Reserve Bank of India – RBI ) collapsed ?


On 22nd March 2012, i had written that we have ‘Oversold the India story’ http://commonmansblog.com/2012/03/ ) , and what i had predicted for the economy in the April , May and June quarter,  happened ! 

Again , on 11th October 2012, i wrote on my blog ‘How India was fast turning from a ‘Emerging economy’ to a ‘Submerging Economy’ ( web link  :  http://commonmansblog.com/2012/10/11/india-from-emerging-to-a-submerging-economy/ . Now , read the fact about our Central Bank . As i said earlier , i am not worried on the 2014 for elections , but for the economic scene that will unfold in 2013 for the average Indian middle class , we are building a disaster  & fooling ourselves ! It is a call to action !

On November 5th ,2012 ,  The Economic Times carried the report that , the country’s central bank , Reserve Bank of India ( RBI ) would run into losses if asked to pay interest on mandatory percentage of deposits banks have to park with the centre bank , called the Cash Reserve Ratio ( CRR).  The RBI has stopped paying interest on such mandatory reserves since 2007.  Finance ministry had suggested the bank to pay 7 % interest on these deposits . 

 Does it mean that the country’s central bank has collapsed ?  If yes , why have we not discussed this in parliament, and are looking at FDI and other ways like stake sales in PSU’s and auctions of the sovereign assets to hide this news and infuse money in the system . 

 
Prime Minister and Finance Minister owe and explanation to this nation on this issue .
 
 

NEW DELHI: The finance ministry has decided to review the expenditure and reserves position of the Reserve Bank of India (RBI) after the central bank indicated that it is not in position to pay interest on the reserves banks maintain with it.

A government official downplayed it as a routine review of the reporting structure and disclosure requirements of the RBI, but it comes at a time when there is already obvious tension between the finance ministry and the central bank over the conduct of monetary policy.

“It is the government which tables the annual report of RBI in Parliament, so there is nothing wrong if it (government) wants to know how RBI prepares its balance sheet. We are not questioning them or raising objections,” a ministry official said.

However, another finance ministry official admitted that the review started after the RBI had indicated that it would run into losses if asked to pay interest on mandatory percentage of deposits banks have to park with the central bank, called the cash reserve ratio (CRR). The RBI had stopped paying interest on such mandatory reserves since 2007.

The finance ministry had suggested that the RBI should pay 7% interest on these deposits, pitching it as a measure that will help lower rates even if the central bank does not ease monetary policy. It had argued that all major central banks either do not mandate a reserve ratio or pay an interest on the mandatory reserves they ask banks to set aside.

“RBI had made certain arguments. Now, we want to understand their expenditure sub heads, format of disclosures so that we both are on the same page,” the official said.

The government is studying RBI’s expenditure, revenue, contingency reserves and investments, he added. On Tuesday, the RBI dashed hopes of a rate cut, but lowered the cash reserve ratio (CRR) by 25 basis points to 4.25%.

Please check more eye-opening statistics on Indian Economy on my blog .

From January , 2013, i will be working full-time to figure out the economic model for India , that will take the country out of the current crisis

Rajendra Pratap Gupta 
Healthcare I Retail I Rural Economy I Public Policy

Give us a Prime Minister – Manmohan Singh is a good professor but certainly not a PM material


Dear Mrs.Sonia Gandhi,

Since you are the President of Congress party , please look into this email

Over the last few years , we have tried to accept Dr.Manmohan Singh as our Prime Minister , but his performance as a congressman might be good , but he has failed completely as a Prime Minister . Congress has been blinded by Gandhi dynasty to such an extent that it has become poor in chosing the right people for the right job. May be that your and Rahul’s intellect is not upto the mark where you can choose competent people .

Over the years , congress government under your Presidency has become a government of faulty planning , false promises , blaming coalition for your failures and blame free investigations in most of the scams 

  •  This government has too many highly educated people, economists & NRI experts & advisors , but still the wisdom to understand the problems and give exact solutions is missing .
  •  Every time your Congressmen give a new date about controlling inflation , and every time they miss it . When the inflation is perpetually high , you blame coalition politics for it. So why do Indian’s pay a price for your forming the government ?Dissolve the government and go for fresh elections .
  • You are not able to judge the talent and most of your ministers are highly inefficient and corrupt , and we were hoping that Sharad Pawar would be removed so that he could focus on the ICC world cup in 2011( Which he will do anyways !!), but he seems to have hypnotized you !! He is still around !
  • Your party believes that , by revealing the names of those who stole the government money and deposited them in Swiss Banks , would pose a security risk ! So you are trying to tell India that, majority of your office bearers are Swiss account holders !! And that their getting caught would mean that the government would collapse !! Anyways , Julian Assange is on the way for dropping a few names , and I do hope that they are not from India & Congress !!
  • Industrial growth has been reduced to 2.7 % , lowest in the past 18 months . Would like to answer it why ? Rather , I must ask you if your people know at all why it happened ? 
  • People are very bullish about rural India, and every major FMCG , White good & vehicle manufacturing company is over- joyed with the growth coming from rural India in terms of the purchases being made . Let me take you through a very dangerous & disturbing development in rural India – I call it Rubble ( rural bubble ). I have been visiting rural India and talking with villagers . Here is what I want to tell you. Let’s take the example of Chavane village in Raigad. The village has changed dramatically in the past 3 years. It is great to see concrete (Pucca )houses with two wheelers parked in front of the houses. As you dig deeper , the facts reveal that people sold their land to MHADA for Rs.30,000.00 per acre for SEZ, and with sudden flow of funds, the thatched roof houses got converted into Concrete (Pucca ) houses, and two wheelers were also purchased along with some jewellery . Villagers had for the first time seen so much money, so instant money that came by selling land was used to make aspirational purchases , and it is over now , lands are gone as well !! What will the farmer do ? What will the farm labourers do ? How will they earn their living ? Let’s take another village 80 Kms from Nagpur , where Lanco plant is being built . Villagers have sold land for the rates as high as Rs. 25 lac per hectare . In India , average size of the land holding would be around 5-7 acres. Selling the entire land would fetch Indian farmers between Rs. 1.25 lac to 1.75 crore depending upon the size of the holding and the rate paid by the acquirer. On these lands , manufacturing plants would come up. We would never see greenery again. And farmers and their children who do not have jobs and land to do farming will be the next anti social elements or naxalites !! With land not available for agriculture , inflation would be higher than what it is today . Today farming is seen as a disdainful activity , and people want to do a job of Rs. 4000 but do not want to work in farming . Your congress government has kicked the ass of 100’s of millions of farmers over the past 60 years , and we are on a temporaray rural growth that I call as a rural bubble – Rubble !! India is headed for a major crises , & all because of the faulty policies of successive congress governments focused just on building billionaires , industries and encouraging FDI !! Get retail FDI in India , and see how the 12 million kirana stores and their families will starve to death . I have had discussions with the Parliamentary Committee of Commerce , Chairman in 2009 , Dr.Murli Manohar Joshi , and have given him in detail the reasons why we need to avoid FDI for the next 5 years at least !!
  • For price rise , last year ,Manmohan ji said that it was due to poor rains , in 2010 we had good rains and good crop , so why the price rise ? Kindly explain 
  • I was in Nagpur on 17th / 18th , and I read in one of the news papers about the fact stated by none other than Mr.Subramanian Swamy that, your bank balance was about Rs.10 crore some twenty years back , and now it is Rs.80,000.00 crore !! I think that this shows that inflation is very high at 10, Janpath . Please clarify if you actually made 60 % money in the 2G scam or this money came from abroad ? You are answerable 
  • Ironically , in the current times , we have a strong opposition but a weak ruling party . How can this government run ? If BJP comes down on its demand for JPC in budget session, Indian public will assume that it ‘settled’ the matter with congress and will never let them win again the seats that they are looking for, and if they keep their agitation on like the winter session , your government will have to go , and India will see a sign of relief !! 
  • Madam, congress might be your personal fiefdom , but not this country . You have created multiple power centers more powerful than the PM , like Rahul , NAC etc….You are the worst Congress President in the history of this country . But usual , we have a saying ‘Andhon main Kane Raja’ So you are the right person for the congress, which does not have any talent left !!
  • We have an outdated finance minister , unfit Agriculture minister , Hyper environment minister and an ineffective Person on the seat of the PM. All along, I have heard that we need 100 good people or 1000 good bureaucrats etc. But the fact is that , we just need one right person : at the seat of Prime Minister . One right person will change the future of this nation , and Manmohan certainly is a disaster at the cost of people . At this time , we cannot afford to have a lame duck as a Prime Minister of this youthful nation . Please give us a Prime Minister , we do not need a professor !! 
  • A suggestion for controlling food inflation : Please ask the government to start a daily free ( even if you charge the farmers for this service,  it is fine ) truck service from the remote villages to cities , where only farmers can come directly to the market and sell their products, rather than selling through agents , mandis or APMC . This will ensure that the person who adds maximum value and takes maximum risk for growing the produce ( farmer ) should also get the maximum profit . The profit at every point of sale post the harvestor ( farmer) should not cross 15 % , and this will bring down the prices to reasonable levels permanently . I read Subbarao stating that the government is desperate to control inflation and will raise the base rate , I heard Chidambram that government is clueless about the tools to control inflation , Sharad said that he cannot control what the farmers want to grow and so he cannot control food inflation . All these stupid statements come because you have bookish professors and so-called highly placed intellectuals and NRI & outdated advisors , who have no connection to ground reality . I do not understand how will raising the rates decrease inflation ? You have been doing this for the last two years and the result has been same – inflation has only increased . Do we need such economists who do not have answers to the common man’s problem ?
  • Do you never apply your brains about this fact that, the prices of the grains and vegetables are sky-high , still the farmers are committing suicides ? Does this not help you understand the problem and get an answer ? You all must be high level fools then !! 
  • In addition to high prices of food stuffs, by increasing the price of petrol again you have signaled the common man that ‘do not eat , do not go to work’

 Nitin Gadkari ji , please take up these matters with utmost seriousness , as congress is forcing the poor people to take to suicides by failing to control prices . If BJP does not take the matter seriously , the people of India will feel betrayed. Congress is fast becoming a failed party under you Sonia Gandhi ! Please either give us a PM or you and PM can go now ….. do not let this great country go to dogs !! This email is marked to Sharad, your dear son , FM , HM etc. to do some soul-searching and step down

Rajendra Pratap Gupta

www.rajendragupta.wordpress.com

Let not inefficiency , inflation and corruption get into 2011


Dear Mr. Singh ,

Last year was the worst year of the decade, and perhaps after independence due to your weak leadership as Prime Minister.

I read today in the newspapers that, the food inflation is in double digits , i feel it is not just double digits , but a double blow for the poor or medium class fixed earners, whose salary does not increase with inflation . Think about daily wage earners that earn 40-60 Rs a day and manage their family of four ( two children and parents , though we know that poor people have more than  two children !!) ? Do you not feel the guilt , that you have caused irreparable damage to the nation, and its people both economically , and its image in the eyes of the world ? Today we are called a scam friendly corrupt nation – a nation of scamsters!!

People have got carried away with your degrees, but seeing your miserable performance , i have realised the difference between being educated , being knowledgeable and being wise . You might be educated , but you are definitely not knowledgeable and not at all wise ! A Prime Minister is expected to be Wise and pro-active on important issues . You have built your good image , but ruined the nation’s image !

You and Pranab are fooling the people of this nation by showing 8-9 % GDP growth and a higher forecast . Reality is before us, it is difficult to survive for a common man in today’s time when one cannot get anything done without paying money , when one cannot live within his salary seeing the high price of daily food intake . A big Shame on you both and Sonia !!  With such revolting conditions , i am sure you are working for pushing people to take to Naxalism and crime !!

Two days back i was talking to Dr.Murli Manohar Joshi  and discussing the current developments , and i told him that, Dr.Joshi you could have proved to be a better PM ! Incidentally , there is only one Dr. in Congress and in BJP. In Congress ,It is yourself ,  and Dr.Joshi is the Dr. of BJP. I have had a chance to work with him on several issues , and have seen his grasp of real issues facing the nation,  and no wonder , even you have been high in praise for his abilities as PAC , Chairman, besides, other colleagues in congress . I am sure that he would have proved to be a much better Prime Minister . I cannot comment on others , as i do not know other leaders much .

My humble request Manmohan ji, give Indians a chance to celebrate the new year , Please resign and go ……………we do not want more corruption , more inflation and more GDP !!

We would happily settle for no corruption , low inflation or no inflation and a moderate GDP .

Go now Sir , take rest .Let’s celebrate New Year with a new Hope

Hope this does not fall on deaf ears

Wish you a great year ahead

Rajendra Pratap Gupta

Email : Office@rajendragupta.in

www.rajendragupta.wordpress.com

3 G & BWA Auctions – Things could have been done in a better way


Dr.Murli Manohar Joshi

Chairman

Public Accounts Committee

Government of India

6 , Raisena road , New Delhi 110001

Dear Dr.Joshi,

I am sure this finds you fine .It was really nice talking to you yesterday. I wish to submit the following for your kind consideration

Recently , the government has raised Rs. 1.06 Lac Crore from the 3 G & BWA auctions. Though it is a different issue that the government was expecting a modest Rs. 32000.00 Crore from the auction ! The following should be considered

  1. What was the basis of the government’s projections ? Was it a failure on the part of the government that the proceeds of the auctions exceeded by 3 times of the projections from the government ?  This clearly gives a reason to believe that there was a systemic failure on the part of the government and it shows up in government’s failure to arrest price rise ( inflation )
  2. Was the spectrum auction and sale the best option ?
  3. If the government went for a zero price or nominal booking price,  and allotted spectrum for the entire India as one circle with say a 25 % – 30 % of the recurring revenue share from the telecom providers, would it not be better in serving the interest of the government in the long term ? It would have eventually generated much higher return per year and every year rather than one a time high auction fee ! What was the basis of deciding one time auction fee with an expected collection of Rs.32000 crore ?  This money ( Rs.1.06 lac crore ) might give temporary sound bites to Pranab Da ( and the PM ) for no efforts of his or Mr. Raja . But the fact is that , it will put a strain on the telecom companies and will also suck the liquidity from the markets . This will also cause a long term loss to the government as it could have gained immensely , had it gone for a lower or zero initial fee and a larger share in the recurrent revenue from the telecom providers. This is a myopic policy of this government and a big loss to the exchequer
  4. What was the total loss in previous auctions done in arbitrary allocation of telecom spectrum, and what is the progress in the CBI investigation ? Why has the FIR lodged by the CBI not named anyone ? When the senior most minister or the bureaucrat should be named in the FIR , what has prompted the CBI to lodge the FIR against unnamed persons ?
  5. Since Rs.10.6 Lac Crore is already raised through the auctions, i suggest that the government allocates the 10 % the money raised in India Innovation and Entrepreneurship fund to promote innovation and entrepreneurship amongst youth of the nation

I am sure you will take up these matters in appropriate forums . We look at your leadership in addressing some important issues concerning the nation .

With best regards

Rajendra

Rajendra Pratap Gupta

Email: office@rajendragupta.in

Office.rajendra@gmail.com

High GDP but low GDP per capita – Time to give a public explanation – the Congress and the Opposition


If we see , India’s GDP is growing but the majority of the population is not prospering . Why ??

Let us consider this

The quarterly growth report card shows that Mining and Manufacturing contributed between 18-22 % of the GDP  in the Q 1 , 2010 numbers released last week.( Remember mining is concentrated in a few government PSU’s or some mining barons like Reddy’s of Karnataka etc )

Exports are roughly 13  % of the GDP

Agriculture contributes 20 % of the GDP  ( Supporting 60 + % of the population )

My view is that,  the decline in agriculture & growth in mining can be related directly to the growth of Naxalism , as one creates a naxalites and the other nurtures it !!

Rate of growth of yields per unit area in Agriculture  has fallen in:

Food grains from 3.39 % in 1992-93 to 1.39 % in 2001-02

Non-Food grains from 3.19 % to -0.57 %

According to the Economic survey between 1980-81- 2001-02 the capital formation in agriculture has fallen from 3.4 % to 1.3 %

FDI in Agriculture was never encouraged or focussed – Announcements does not matter Dr. Manmohan Singh ji ?

Between 2002-08, population growth has been 1.4 %  and the labour force has been growing at 1.9 %

According to the World Bank Development report

Between 1988 to 2008( 20 years ) as a percentage of GDP the :

Agriculture sector decreased from 30.5 % to 17.3 , whereas 65 % of the population depends on agriculture

Industry grew from 26.2 % to 28.8 % ( Population & people employable has been growing faster )

Manufacturing decreased from 16.2 % to 15.1 %

Services increased from 43.4 % to 54.6 % ( Private sector contributed to this )

Household final consumption expenditure decreased from 65.8 % to 54.1 %

Imports of goods and services increased  from 7.5 % to 28 %

Yesterday , in the Times of India , the Finance Ministry’s chief Economic Advisor said that GDP growth of 8.9 % in the Q 1 of 2010-11 was due to robust growth in capital goods and consumer good production

Does it not look like some Middle eastern countries , where the GDP is very high but GDP per capita is less,  as the high GDP is due to mineral oil wealth , and low GDP per capita is due to the fact that the oil wells are in the hands of a few royal families !! In India , Mining , Exports and trade is in a few hands and the focus , incentive and investment is maximum from the government !! For Agriculture , we all do not depend on the government but on the Rain Gods !!

BJP must act as a responsible opposition . The current state of affairs is not just a failure of the ruling front,  but of the entire opposition . Public demands an explanation from both !

What is government doing ? Bhopal Gas tragedy GOM’s is just an issue to divert the attention from real burning concerns of the public

Politicians are addressing 90 % urgent matters and 10 % important matters.

Time to act responsibly and explain or else both Congress and the opposition would be damned in the next election

Rajendra Pratap Gupta

Email: office@rajendragupta.in

Judiciary, Diplomacy and political leadership of the nation will be tested soon


The recent confessions of David Coleman Headley about his involvement in 26/11 proves his guilt . With this ,  India must seek David Coleman Headley and Tahawuur Rana’s extradition for trail in India . Both David & Tahawuur have committed an offence on Indian soil and there is no reason for India to give up the demand . If America does not extradite David Coleman Headley and Tahawuur Rana to India , it would mean the failure of Judiciary, Diplomacy and political leadership in India

India created NIA after 26/11 along with a lot of show biz and media hype to show that India is committed to fight terror. India needs David and Tahawuur more than the nuclear deal from America

I am sure that India will get to try and execute these gruesome offenders soon on Indian soil as per the law of the land .

Rajendra Pratap Gupta

Email : office@rajendragupta.org