Inflation and the Manipulation Behind It

It has been some time now that we have had high inflation rates, and this has been pushed to the extent that for the first time in India we have a situation where housing loans now would perhaps pass on to the children of the lenders post their retirement because of ballooning interest rates spiraling out of control. It does not surprise anyone that this situation of super inflation (as I would call it) does not come under control. There are multiple reasons behind it. I shall talk about a couple of them, and hope others pick the signals up as well.

Food prices have gone up across the world. Continuous monitoring by the Food and Agricultural Organization (FAO) has shown that prices have risen five times since 2007, when food was treated as a commodity and future trading was allowed with the blessing of the World Trade Organization (WTO) and big agricultural giants like Cargill, Dow and Monsanto. This has already created havoc across the world which frighteningly led to food riots in many countries in the past four years, notably Egypt, Jordan and Mozambique (these are ones that I can recall). Why are we allowing this to happen when even today people are not able to buy food due to the impossibly high prices and in contrast we never produced more food ever in our recorded history? Contrast this with the fact that we have touched the million farmer suicide mark in India (read here as brought out by the great journalist P. Sainath).

Another major reason that we have seen such great growth is that foreign investments have increased and our export sector is recording ever increasing sales. All this has led to a surplus of cash floating in the economy while also putting stress on our financial sector for money. How is this possible in the face of a shrinking world economy? Obviously, this has implications that there is a major problem of illicit money floating around, with people mostly bringing in their illegally earned wealth, also pointed out by a recent Kotak Securities report (read here) and has been continuously noted by people like Subramanian Swamy (yes the man). Instead of investigating these issues, the government in turn shot back by saying that all these are nothing but lies, making you question the intent of the government of the day.

There are a lot more issue to talk about. I will dwell in them over a period of time. Suffice to say that there are a lot of things going wrong with the way the economy is getting disconnected from the people who make it up in the first place.

Comments

Popular posts from this blog

The Senseless Obsession with a Uniform Civil Code - Hindus Will be Net Losers

The Kidnapping of Nahida Imtiaz - The incident that caused a spike in terrorist kidnappings in Kashmir

The People Left Behind in Assam