Comments on: Inflation, government and the people http://ashmu.wordpress.com/2008/04/03/inflation-government-and-the-people/ Analysis Tue, 22 Dec 2009 12:47:08 +0000 http://wordpress.com/ hourly 1 By: Aseem Naphade http://ashmu.wordpress.com/2008/04/03/inflation-government-and-the-people/#comment-664 Aseem Naphade Sat, 21 Jun 2008 17:53:42 +0000 http://ashmu.wordpress.com/?p=37#comment-664 Yes it is definitely true that the current problem is not short term in nature at all. The price rise is inevitable because it is global phenomena, currently inflation is at 11.05% and India doesn't have a strong Public Distribution system (PDS) either. In China the rate of inflation is perhaps more than India but they have a strong PDS system, therefore the burden on the common people is reduced considerably. Yes your definition of stagflation is perfectly correct. It was a term used by the monetarists of the 70s. Strangely the monetarists have fiscal and monetary prescriptions for every problem. Which in my humble view is not enough, fiscal and monetary policies can enhance a particular program or policy, it cannot be the source of the solution. Economics is basically developmental in nature. Yes it is definitely true that the current problem is not short term in nature at all. The price rise is inevitable because it is global phenomena, currently inflation is at 11.05% and India doesn’t have a strong Public Distribution system (PDS) either. In China the rate of inflation is perhaps more than India but they have a strong PDS system, therefore the burden on the common people is reduced considerably.

Yes your definition of stagflation is perfectly correct. It was a term used by the monetarists of the 70s. Strangely the monetarists have fiscal and monetary prescriptions for every problem. Which in my humble view is not enough, fiscal and monetary policies can enhance a particular program or policy, it cannot be the source of the solution. Economics is basically developmental in nature.

]]> By: swagata http://ashmu.wordpress.com/2008/04/03/inflation-government-and-the-people/#comment-662 swagata Fri, 20 Jun 2008 06:02:22 +0000 http://ashmu.wordpress.com/?p=37#comment-662 Thank You for your well-thought article.However,as an economics student I was under the impression that Stagflation occurs when Growth rate falls and at the same time price rises,and I think that has already occurred in India in the first quarter of 2008.Just tell me,am I right? Friedman was all for Central Bank intervention and India now is applying that policy also,with RBI raising CRR and intervening with interest rate,so I think Government is on right track.But we must understand that it is NOT a short term problem so there is no chance of getting an instant solution.We will have to wait for the policy measures to work properly before starting political agitation. Thank You for your well-thought article.However,as an economics student I was under the impression that Stagflation occurs when Growth rate falls and at the same time price rises,and I think that has already occurred in India in the first quarter of 2008.Just tell me,am I right?

Friedman was all for Central Bank intervention and India now is applying that policy also,with RBI raising CRR and intervening with interest rate,so I think Government is on right track.But we must understand that it is NOT a short term problem so there is no chance of getting an instant solution.We will have to wait for the policy measures to work properly before starting political agitation.

]]> By: Meenu http://ashmu.wordpress.com/2008/04/03/inflation-government-and-the-people/#comment-641 Meenu Fri, 04 Apr 2008 14:39:15 +0000 http://ashmu.wordpress.com/?p=37#comment-641 good one!! another vote to hold politicians responsible for inflation! good one!! another vote to hold politicians responsible for inflation!

]]> By: Aseem Naphade http://ashmu.wordpress.com/2008/04/03/inflation-government-and-the-people/#comment-640 Aseem Naphade Fri, 04 Apr 2008 13:29:47 +0000 http://ashmu.wordpress.com/?p=37#comment-640 I see, i was under the assumption, that most of Keynes contribution was refuted by Friedman, anyways thanks for your comments, i have made the necessary changes in the article, as far as stagflation is concerned, yes thats actually an extreme case, it may not really happen. India will definitely continue to have a a satisfactory if not good growth rate, due to many factors one of them being the huge demand of goods and services from ever increasing the population. However we have in recent times experienced jobless growth as this article also reveals http://timesofindia.indiatimes.com/articleshow/1930668.cms, therefore merely maintaining 8% growth may not be enough, it has to create jobs and at the same time economic inequalities have to be minimized(but i doubt whether thats a function of growth). I see, i was under the assumption, that most of Keynes contribution was refuted by Friedman, anyways thanks for your comments, i have made the necessary changes in the article, as far as stagflation is concerned, yes thats actually an extreme case, it may not really happen. India will definitely continue to have a a satisfactory if not good growth rate, due to many factors one of them being the huge demand of goods and services from ever increasing the population. However we have in recent times experienced jobless growth as this article also reveals http://timesofindia.indiatimes.com/articleshow/1930668.cms, therefore merely maintaining 8% growth may not be enough, it has to create jobs and at the same time economic inequalities have to be minimized(but i doubt whether thats a function of growth).

]]> By: Amol Agrawal http://ashmu.wordpress.com/2008/04/03/inflation-government-and-the-people/#comment-639 Amol Agrawal Fri, 04 Apr 2008 05:25:09 +0000 http://ashmu.wordpress.com/?p=37#comment-639 Another point is on stagflation. Well you can't say India might face stagflation. An 8% growth can't in anyways be termed as a slow growth given the world economic conditions. Stagflation is more like having a recession and hyper inflation at sametime. Another point is on stagflation. Well you can’t say India might face stagflation. An 8% growth can’t in anyways be termed as a slow growth given the world economic conditions. Stagflation is more like having a recession and hyper inflation at sametime.

]]> By: Amol Agrawal http://ashmu.wordpress.com/2008/04/03/inflation-government-and-the-people/#comment-638 Amol Agrawal Fri, 04 Apr 2008 03:53:02 +0000 http://ashmu.wordpress.com/?p=37#comment-638 Assem, You are mixing the two - Keynes and Friedman. Keynes emphasised on fiscal policies and Friedman on monetary policies. Friedman would have never been happy about the supply side interventions by government. He was anti government and advocated free markets in a big way. He always said inflation is always and everywhere a monetary phenomenon and would have been happy with the Central Bank intervention. Keynes time was different and inflation was never a concern but growth was. So he relied on fiscal policies for pushing growth. And Keynes has been misinterpreted many a times. For fixing inflation we need number of reforms in the rural economy. Otherwise all these measures are short term and inflation would keep revisiting. Assem,

You are mixing the two – Keynes and Friedman. Keynes emphasised on fiscal policies and Friedman on monetary policies. Friedman would have never been happy about the supply side interventions by government. He was anti government and advocated free markets in a big way. He always said inflation is always and everywhere a monetary phenomenon and would have been happy with the Central Bank intervention.

Keynes time was different and inflation was never a concern but growth was. So he relied on fiscal policies for pushing growth. And Keynes has been misinterpreted many a times.

For fixing inflation we need number of reforms in the rural economy. Otherwise all these measures are short term and inflation would keep revisiting.

]]>