Tuesday, September 2, 2008
Inflation and its impact on economy
Friday, July 4, 2008
Reasons for slowdown in the World Capital Market in 2008
The beginning of the year 2008 saw slowdown in the capital markets all over the world. Starting from developed Nations like US and
The most important factor which is causing inflation is the rising price of crude oil all over the world. This rise in oil price is causing transportation cost to rise, which in turn is accelerating the general price level.
Again if we consider from the point of view of US elections, the two major parties that are contesting the election are the Democratic Party headed by Barack Obama and the Republican Party headed by John McCain. If Democratic Party comes to power, then as promised by Obama, there would be no outsourcing from US to the developing countries like
Now the question is: Will this slowdown in the stock market continue in the years to come?
The answer is obviously no. This is because, History says that with time the income of people had risen and it will continue to do so in future. This rise in the income of the people will raise the general price level and so there will be always some inflation. However, in the present scenario, inflation has risen too much, leading to fear among the investors, who are now in the process of withdrawing their money from the stock markets. Now the Central Banks across the globe has already resorted to various monetary policies to control inflation, which will definitely bring down inflation in the months to come as it has happened in the past. Moreover International investors are looking forward to the
Thursday, July 3, 2008
Land Acquisition in West Bengal and its impact on the Indian Economy
The left front Government that came to power in
However, circumstances changed with time. Slowly with the Globalization of the Indian Economy, the left front Government in
The initiative of the government to acquire land for industrialization is no doubt a brilliant idea. But the sad part of the thing is that the Government acquired agricultural lands capable of multiple cropping. Had the Government acquired barren land for industrialization, it would not be an issue. But the Government, instead of acquiring barren lands acquired highly productive lands without thinking about its future impact on the Indian Economy.
The impact of acquiring agricultural land for industrialization is very dangerous and may even lead to Economic recession and this is in fact true if we analyze it carefully from the simple economic point of view. It is widely accepted in Economics that agriculture and Industry are interrelated, each supporting the other. Agriculture provides raw materials to industry and food to the people who work there, while Industry provides a large number of machine made consumer durables and even fertilizers to agriculture. Now acquiring of agricultural land would mean reduction in agricultural production. At the same time with Industrialization disposable income in the hand of individuals increases and people demand more food. At the same time with acquisition of agricultural land for industrialization, production decreases. This results in an increase in the price of agricultural commodities such as rice, wheat, sugar and edible oil which is in fact is now noticeable from the present market scenario. Now as price of food grains rises, price of other goods also increases, leading to an increase in general price level. This results in inflation.
Now foreign investments occur only because labor is cheap in
So why prefer such a process of industrialization which will take us back again to de-industrialization and recession in the long run.