A Different World Post-Financial Crisis

Historical events like the Great Depression, World Wars, and pandemics have had a marked impact on individual’s life course and the current financial crisis that caught the whole world into its grip seems to have similar impacts on lives of people. The crisis that resulted from the financial crisis in the US has hit people from every part of the world and walk of life. Current world wide economic downturn has changed not only changed the way of life people had been leading but also the way they think. It has not only brought millions of people on their toe but also many nations as well. The economic downturn has made nearly every country poorer than pre-crisis era but the developed countries have been hit hardest by the crisis

Sustainable Development: Nothing but a Trade-off

The history of human beings tells that in the process of growth and development it is natural for any society and civilization to move towards modernization, urbanization and industrialization of its economies. And it is continuous process that never stops as there is no stopping where it can be said that it is done. Rather societies and civilizations demands more from this process and often lead to imbalances. Also the definition and yardsticks for these processes change over time depending on societal awareness.

Following the same ethos, at present the world is moving towards modernization, urbanization and industrialization of economies. This process of modernization, urbanization and industrialization of economies has huge impact on the economic activities and environment and has resulted into increased population, agricultural output and industrial production etc. But at the same time it has resulted into degradation of environment because of increasing pollution from the increased industrialization. Although the increased economic activities have negative impacts on the natural resources and environment but even after it, sustainable development of societies and economies is possible and can be achieved by taking care of the issues relating environment. For this societies and countries has to take initiatives in all spheres of lives such as inequality and poverty, the direction of industrialization and urbanization, population and education, lifestyle and use of fertilizers etc. because all these factors have long term relationship with each other; sometime direct and sometimes indirect.

Rising Inequality in the Whole World is Alarming for Policymakers and Economists

In last 5-6 decades the whole world has witnessed a sea change in its shape, character, life and profile. Everything since 1950 has changed. There is hardly any colony in the world today. On average life of people has bettered during this period. The percentage of people having access to basic education, health services and other basis needs have increased significantly. Also according to an estimate the prosperity in world has increased by around 25 times during this period.

These achievements altogether are something about which world can appreciate in general. But once we look into particular regions and countries all the achievement seems to be of no use. And if we look at the world as two lots such the poor and rich, the scenario is even worse. Countries like China and India have seen huge economic prosperity but regions like Africa during this period seems have remained immune to the growth and development that has taken place. Country like Republic of Congo has poorer than what it was during 1950s. Country’s wealth is now half of 1950s level. Also if we look deeper into the developed and developing countries like the USA, the UK, China and India etc picture in these countries is also grim.

During this period of around 60 years, the world as whole has become richer and prosperous place but at the same time the inequality has increased significantly. The whole growth and development that has taken place has benefitted the rich and poor have been treated as lesser child during this era and this is true for individuals and countries both. Relatively the rich has become richer and the poor have become poorer. Reports suggests that most of the wealth of world is in hands of less than 100 individuals and this true for both developed, developing and least developed countries. In case of developed countries this inequality looks to be sharper than developing and least developed countries. Perhaps that was the reason why the USA had to face the movements like Occupy Wall Street and the rest of world also felt the heat of same.

This is an alarming situation because this increasing inequality is going to have impact on overall public discourse across the world. Also globalization seems to be a factor in increasing inequality as it provides opportunities to businesses to increase their wealth dis-proportionally. So this is the time for the policy makers to think to curb down the increasing inequality and theories working behind the globalization needs to be reviewed by the economists so that it is more beneficial for common man on the street than being tilted in favor of money power.

Reasons of Repo Rate Cut by RBI

Finally RBI has cut down the Repo rate by 25 basis points from 8% to 7.75% and stock market responded as expected with the prices of different stocks from different sectors saw sharp rise. But question arises why RBI has taken this step of cutting repo rate at this time while it was ignoring the same demand from industry and financial sector since last 6 months as the inflation had not very high since July 2014. Answer of this question obviously not easy one but what I think is as discussed below.

RBI had been a conservative regulator in the world reflecting the typical Indian attitude that tries to lower down risks on vital and important issues relating mass interest and it remains to the same even in times of current governor Raghuram Rajan. So stemming from this cultural attitude RBI had been very observant and conscious about the inflation and it wanted to ensure that economy again would not undergo the inflationary pressure. Perhaps this six month period was enough for RBI to have confidence that the present economic scenarios would be favorable enough to take this rate cut decision.

Along with the lower inflation in the economy, global economic scenario is now a cause of concern for RBI and other regulators across the world. The world economy is again showing signs of slowdown. Europe again seems to be falling into its own traps with Greece leading towards grave economic issues. Also the falling oil prices is now a concern for the whole world as there are a number of countries that are highly dependent on oil for their revenues and falling prices would result into lower revenues for these countries leading to lower demands for goods and services. Countries like Russia, Iran and other Arabian countries are facing the heat of falling oil prices. This will as a whole increase the problems relating to slowdown in world economy.

On the other hand, falling oil prices are good for country like India which has to import most of its oil from other countries. This would help to save huge amount spent on imports. But this gain is not enough to compensate for the possible losses due to economic slowdown in rest of the world. This can only be compensated by increasing growth rate in economy and for that low cost money is must. So RBI seems to have considered these issues while taking decisions relating to rate cut and it is quite possible that in next review another rate cut may be possible and this time more direct.

धर्म का खेला

कुछ लोग बड़े ही चिन्तित हैं कि भारत में इस्लाम और ईसायत पर हमला हो रहा है क्योंकि कुछ हिन्दूवादी संगठनों ने कुछ मुस्लमानों को तथाकथित रूप से हिन्दू बनाया था आगरा में और अलीगढ़ में तैयारी है कुछ और मुस्लमानों और ईसाइयों को हिन्दू बनाने की। तो कुछ लोग खुश हैं कि चलो कालचक्र का पहिया घूमना शुरू तो हुआ। माफी चाहूंगा पर आप दोनों ही गलत हैं। थोड़ा नहीं बहुत गलत हैं और आप लोगों के इस सोच या कर्म से ना तो राम खुश हो सकते हैं ना ही अल्लाह या ना ही गाड। आप सभी महाविद्वानों से नम्र निवेदन है (शायद आपके के अनुसार मैं इस काबिल नहीं हूँ) आप अपने-अपने धर्मों में पाए जाने वाली विसंगतियों एवं कुप्रथाओं की ओर ध्यान दें नहीं तो आप महाविद्वान लोग अपने-अपने धर्मों नारकीय बना देगें (खैर आपने बहुत हद तक बना दिया है धर्म और मानवता दोनों को) और लोग आपको धन्यवाद बोलकर नया रास्ता ले लेंगे पर तब आपकी बन्दूकें और धन सब धरी की धरी रह जाएंगी।

पता नहीं कौन सा जिहाद ये कि बच्चे छोटे भी काफ़िर हो गए।

माफ करना बच्चों तुम्हारे पिता और दादा कुछ ज्यादे ही सयाने हो गये हैं कि बन्दूक थामकर मजहब बचाने चले हैं………….।

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राजीव उपाध्याय

Are Econometric and Finance the Root Cause of Economic Problems?

With every passing day the differences between the econometric and finance is becoming less evident and it is not only in forms of the convergence of the both but also in forms of the nature, usability and importance that these two branches of study of getting these days. If we look holistically; econometric and finance are auxiliary activities and tools in the hands of the decision makers respectively in the field of economics and management and are supposed to provide support to the real economy in true senses.

But in last few decades every thing has changed and econometric and finance have turned out to be the most important aspect of economic and business policy in this highly competitive environment where a number of people are putting efforts acquire the same resources. Today both the economic and business policy is evolving around these two and are resulting in increase in the risk (look are the increasing frequency of economic and financial crises). It seems that the increasing dependence on these two and excess use of numbers in the planning is becoming a problem in itself. So can we say that econometric and finance are the root cause of all the economic problems that the today’s world is facing

Inflation Declines in India

India since long has been facing tough times on the front of inflation but after the change of guard in New Delhi, inflation in Indian economy is on fall. The retail inflation was at 7.73 per cent in August and in Sept it had been declined to 6.46 per cent and vegetable inflation to 8.59 per cent. The overall food inflation that is measured by CPI had declined to 7.67 per cent in comparison to 9.35 per cent in the previous month and 11.75 per cent in September 2013.

This is good news for India as whole but for a common person even this level of inflation seems to be very high as she has to undergo a period of very high inflation for more than three years where prices of most food products has either doubled or tripled in some cases. But RBI is not expected to decrease interest rates even if the inflation in the economy is below its target of 8 per cent as RBI seems to be not very confident about the low inflation situations in economy. So it will continue an era of high rate of interest for longer period than expected.

राजदीप सरदेसाई को लगे चाँटे का महत्त्व

राजदीप सरदेसाई को जिस किसी व्यक्ति ने थप्पड़ मारा वह अनुचित है और उसके लिए उसे कानूनी के अनुसार दण्ड मिलना ही चाहिए। बस इस घटना का इतना ही महत्त्व है इतनी सी बात ही काफी है। इससे अधिक ना तो अलोचना या फिर भर्त्सना करने की आवश्यकता है और ना ही किसी विधवा विलाप की (जो कुछ विद्वान एवं शान्तिप्रिय लोग कर रहे हैं) क्योंकि इस आदमी को आज अमेरीका नहीं बल्कि जेल में होना चाहिए था पर ये पत्रकारी भगवान हैं अतः ये जो करते हैं वो वेद ज्ञान है, जी नहीं माफी चाहता हँ, कोई दूसरे तरह का दैवीय ज्ञान है (क्योंकि राजदीप जी को वेद और हिन्दू लुच्चे लफंगे और दंगाई लगते हैं)।

स्टैण्डर्ड एन्ड पूअर्स के द्वारा किए गए साख सुधार का निहितार्थ

प्रधानमंत्री मोदी की अमेरीका यात्रा से तुरन्त पहले अमेरीका स्थित स्टैण्डर्ड एन्ड पूअर्स नामक रेटिंग संस्था, जो आर्थिक एवं वित्तिय साख का आकलन करती है, ने भारत की साख को सुधारते हुए नकारात्मक से स्थिर की श्रेणी में वर्गीकृत किया है (Nair, Rebello, & Ami Shah, 2014)। रेटिंग में यह सुधार सामान्य रूप से भारतीय अर्थव्यवस्था के लिए अच्छा और कुछ हद तक सकारात्मक है। परन्तु रेंटिंग में यह सुधार प्रधानमंत्री के अमेरीका यात्रा से तुरन्त पहले ही हुआ है, तो देश में एक विवाद एवं विमर्श शुरू हो गया है कि क्या अमेरीका भारतीय प्रधानमंत्री को मीठी घूँट के सहारे कोई कड़वी दवा पीलाना चाहता है? हो सकता है कि ऐसा ही हो क्योंकि भारत में अमेरीका का बहुत बड़ा आर्थिक हित (विशेषकर विदेशी निवेश) निहित है जिसको वह प्रधानमंत्री और वर्तमान सरकार को साधकर जरूर सुरक्षित करना चाहेगा। इसमें कोई बहुत बराई भी नहीं है क्योंकि वर्तमान परिदृश्य में अन्तराष्ट्रीय स्तर पर आर्थिक संबन्धों का उपयोग राजनैतिक एवं कूटनीतिक हथियार के रूप में सर्वमान्य है। अब ये भारतीय प्रधानमंत्री के विवेक और कौशल पर निर्भर है वे अमेरीका के कूटनीतिक प्रयासों से कैसे निपटते हैं एवं वो भारत के हितों का कहाँ तक ख्याल रख पाते हैं?

Implications of Status-Quo in Monetary Policy by RBI

India’s central banker Reserve Bank of India today announced its monetary policy and it has decided to keep all the rates vis-à-vis repo rate, reverse repo rate, Cash Reserve Ratio and Statuary Liquidity Ratio unchanged. This move by the RBI has clear indication that RBI does not see lower inflation in near future but at the same time there is no threat on inflationary front. In last few months inflation in the economy has eased to some extent and analysts were expecting lower rates but Reserve Bank of India has decided to play safe than regret later.

This decision has some short term as well as long term implications for the economy. First implication is that even though there is no inflationary threat, inflation remains an important concern for the RBI and perhaps it is of view that economy cannot afford higher inflation in future as higher inflation would erode value. So it prefers lower GDP growth with lower inflation than higher GDP growth rate with higher inflation. That means financing in the economy would remain on the higher side and investments by corporate would on the other side till the policy continue or unless there is any extra incentives. That means India is going remain in high interest era for some more time with relatively lower GDP growth rates. Now it would be interesting to see how government responds through the fiscal policy instruments.