Wednesday, January 24, 2007

Ganguly.. and inflation.

Ganguly's back for a while in the team from the looks of it. Finally, he is a playing/contributing member in the team and its great to see that. Hopefully he'll keep up his contributing spirit.. and not just wane away as a 2 series come back wonder. His 90+ score was a good knock. It was great to say everyone finally contribute in the batting lineup and a good score put up on the board. But what's with the 4 dropped catches?? Catches win matches no doubt! If we played like this in the world-cup, well, we'll be walking home real soon. No space in the finals. Buck up Dravid and team! No excuses of "senior members" not being agile.

On an unrelated note.. inflation in India is at an all time high. 6.10+ if I remember right. This is a typical case of the economy "over-heating". The WPI (wholesale price index) and Consumer good price index are all going up, contributing to the high inflation. What can the reserve bank do? Well, as usual they'll hike the repo rate, try to reduce the money circulating in the Indian financial system, thereby indirectly raising the value of the money as compared to the goods being sold. In theory, this should contain the inflation. Well, the RBI has been hiking the rates for the last two years, and nothing has happened. Looks like the problems are much bigger. There is a severe supply problem for skilled labour. The demand is very high for skilled labour. So, what happens.. companies start hiking up pay to attract best available labour. Upward spiral in salaries till this skill shortage is dealt with. Ofcourse, the increasing salary costs are reflected in the prices of goods and services made. If my salary component of cost of my business goes up.. and there's pressure on my profit margins.. heck I'm going to raise the prices of whatever services/products I offer to maintain my margins. Business 101 fundamentals!
So, I guess thats where there Government will try and do something. Crank up the produce of skilled labour. Right now the economy is overheating with the rapidly increasing number of businesses coming to India. Huge increase in demand for skilled labour. It's at levels India is not equipped to handle. So the Government will try and slow things down a little (on the booming business side).. till the supply of skilled labour can catch up. I hear that the Indian Government is looking for foreign partnerships in creating educational institutions to churn out more skilled labour. That should ease some pressure off this problem.
With organized retail coming in now, the inflation figures will pull down a little. Prices of goods usually drop when organized retail kicks in. Lets see how the future pans out!



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