Inflation too low? Is Deflation the new worry?

Hello everyone! yesterday night I was chatting with one of my close friend at that time some issues are raised like what is the effect of financial crisis on Indian economy, what is effect of current inflation level on general pricing level of all the goods throughout economy and so on. So here I just try to brief some points which I think should be known to everyone....
But before that let me brief you some points-

INTRODUCTION-:

• Law of Supply- The law of supply states that, other things equal, the quantity supplied of a good rises when the price of the good rises.

• Law of Demand- The law of demand states that, other things equal, the quantity demanded of a good falls when the price of the good rises.
So ultimately because of rise in price or inflation supply increases (producer’s profit maximization) but at the same time demand for the product decreases (purchasing power of money decreases) which further leads to deflation.
A general decline in prices, often, caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum. The decline in prices of assets, is often known as Asset Deflation. Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the RBI can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind.


WHAT FOR COMMON MEN-
Inflation has fallen from thirteen percent to close to zero in last seven months. But the common man is yet to feel this sharp fall in inflation. Why? Common man will continue to face inflation. You have to keep in mind that the inflation measured by wholesale price index (WPI) dropped on account of fall in prices of industrial inputs. Finished goods will capture this fall in prices of inputs only with a time lag. Another reason is the inflation rate for food items which is still ruling firm at 7%. Even if the prices of food items and finished goods ease there may not be a significant down side to consumer price inflation from 5%.

CURRENT SCENERIO-:
Inflation came in at 0.27% for week ending Mar 27th. From its previous level 0.44%. Nonetheless Inflation for the same period last year was at 5.66%.
Till a few months back we were rallying against RBI to take measures to reign in Inflation, but now I seem to think is this rate of fall too alarming?? I mean if we continue to fall we are risking economy to be shunned in to a spiral slowdown and then we will be worried more of Deflation. I say some Inflation is good. We are already in the RBI comfort Zone and no further fall in Wholesale or Consumer Price Index should be promoted. Why?
People's willingness to buy something today that they think will be worth less tomorrow is very low. Similarly peoples willingness to invest in something that they think will be worth less tomorrow is also very low. Hence some inflation is needed to encourage people to buy today or invest today, thinking that tomorrow it might be more expensive.
We have already seen Demand Deflation . Consumers are no longer supporting the economy, spending is lowered significantly, which makes me worry about deflation. Deflation is deadly and will further paralyze all types of commercial activity.This been said, many folks are calling for and/or anticipating another round of RBI rate cuts , government is mulling a diesel price cut which will cater to furher decrease in Inflation.

Near 0% Inflation Likely for Some Time
But with flagging demand, low inflation is becoming more like a looming threat of Deflation , as prices continue to be high, interest rates are not being pulled back by banks which all contributes to Demand Erosion( destroy gradually).
In my view the next government has its work cut out, they have to invest in building the country, Infrastructure, boosting agriculture production, giving impetus to manufacturing and also focussing on education and empowerment of the poor.
Urban development and spending power can succumb to the slowdown in lending and need to keep up with standard of living. The villagers do not have the problem of mortgages or credit cards or even car loans. They are living within their means and need to be uplifted with opportunity to contribute to the growth of Indian economy.
The sad thing is the only solution to the administration is RBI rate cuts, I suggest we stop doing so and force banks to further lower rates.
So remember Consumer’s behavior will not be affected by the subzero inflation. As per the data I have gone through buying decisions are not deferred on an aggregate levels. It is only in housing and real estate segment that people have postponed buying decision expecting a further fall in prices. With the economy growing at close to 7% the purchasing power of the consumers will increase when the prices fall. The fall in prices from an year ago period will hopefully help in reviving demand and strengthen economy. Also remember that the income for rural India has seen unprecedented growth.

jai Hind

Regards

Garvit D Dave

garvitdave87@gmail.com

How to manage your career & your expectations

how to manage your career & your expectations

These are the personal views of Mr. R. Gopalakrishnan, Executive Director - Tata Sons. A Story on how to manage your career & your expectations

There is a Thai saying that experience is a comb which Nature gives to man after he is bald. As I grow bald, I would like to share my comb with your people, about their career ahead.

1. Seek out grassroots level experience- I studied Physics and Engineering at University. A few months before graduation, I appeared for an HLL interview for Computer Traineeship. When asked whether I would consider Marketing instead of Computers, I responded negatively : an engineer to visit grocery shops to sell Dalda or Lifebuoy? Gosh, no way. After I joined the Company and a couple of comfortable weeks in the swanky Head Office, I was given a train ticket to go to Nasik. Would I please meet Mr. Kelkar to whom I would be attached for the next two months? He would teach me to work as a salesman in his territory, which included staying in Kopargaon and Pimpalgaon among other small towns. I was most upset. In a town called Ozhar, I was moving around from shop to shop with a bullock cart full of products and a salesman's folder in my hand. Imagine my embarrassment when an IIT friend appeared in front of me in Ozhar, believe it or not! And exclaimed, "Gopal, I thought you joined as a Management Trainee in Computers". I could have died a thousand deaths. After this leveling experience, I was less embarrassed to work as a Dispatch Clerk in the Company Depot and an Invoice Clerk in the Accounts Department. Several years later, I realised the value of such grassroots level experience. It is fantastic. I would advise young people to seek out nail-dirtying, collar-soiling, shoe-wearing tasks. That is how you learn about organizations, about the true nature of work, and the dignity of the many, many tasks that go into building great enterprises.

2. Deserve before you desire- At one stage, I was appointed as the Brand Manager for Lifebuoy and Pears soap, the company's most popular-priced and most premium soaps. And what was a Brand Manager? "A mini-businessman, responsible for the production, sales and profits of the brand, accountable for its long-term growth, etc., etc. I had read those statements, I believed them and here I was, at 27,"in charge of everything". But very soon, I found I could not move a pin without checking with my seniors. One evening, after turning the Facit machine handle through various calculations, I sat in front of the Marketing Director. I expressed my frustration and gently asked whether I could not be given total charge. He smiled benignly and said, "The perception and reality are both right. You will get total charge when you know more about the brand than anyone else in this company about its formulation, the raw materials, the production costs, the consumer's perception, the distribution and so on. How long do you think that it will take?" "Maybe, ten years", I replied, "and I don't expect to be the Lifebuoy and Pears Brand Manager for so long"! And then suddenly, the lesson was clear. I was desiring total control, long before I deserved it. This happens to us all the time - in terms of responsibilities, in terms of postings and promotions, it happens all the time that there is a gap between our perception of what we deserve and the reality of what we get. It helps to deserve before we desire.

3 Play to win but win with fairness- Life is competitive and of course, you play to win. But think about the balance. Will you do anything, to win?Perhaps not. Think deeply about how and where you draw the line. Each person draws it differently, and in doing so, it helps to think about values. Winning without values provides dubious fulfillment. The leaders who have contributed the most are the ones with a set of universal values! V Mahatma Gandhi and Martin Luther King for example. Napoleon inspired a ragged, mutinous and half-starved army to fight and seize power. This brought him name and fame for twenty years. But all the while, he was driven forward by a selfish and evil ambition, and not in pursuit of a great ideal. He finally fell because of his selfish ambition. I am fond of referring to the Pierre de Coubertin Fair Play Trophy. It was instituted in 1964 by the founder of the modern Olympic Games and here are two examples of winners. A Hungarian tennis player who pleaded with the umpire to give his opponent some more time to recover from a cramp. A British kayak team who were trailing the Danish kayak team. They then stopped to help the Danish team whose boat was stuck.The Danes went on to beat the British by one second in a three hour event! What wonderful examples of sportsmanship! Play to Win, but with Fairness.

4 Enjoy whatever you do - Sir Thomas Lipton is credited with the statement, "There is no greater fun than hard work". You usually excel in fields, which you truly enjoy. Ask any person what it is that interferes with his enjoyment of existence. He will say, "The struggle for life". What he probably means is the struggle for success. Unless a person has learnt what to do with success after getting it, the very achievement of it must lead him to unhappiness. Aristotle wrote, "Humans seek happiness as an end in itself, not as a means to something else". But if you think about it, we should not work for happiness. We should work as happy people. In organizational life, people get busy doing something to be happy. The more you try to be happy, the more unhappy you can get. Your work and career is all about you’re reaching your full potential. Working at one's full potential, whether it is the office boy or the Chairman, leads to enjoyment and fulfillment. A last point about enjoyment. Keep a sense of humor about yourself. Too many people are in danger of taking themselves far too seriously. As General Joe Stilwell is reported to have said, "Keep smiling. The higher the monkey climbs, the more you can see of his backside".

5 Be Passionate about your health -Of course, as you get older, you would have a slight paunch, graying of hair or loss of it and so on. But it is in the first 5 - 7 years after the working career begins that the greatest neglect of youthful health occurs. Sportsmen stop playing sports, non drinkers drink alcohol, light smokers smoke more, active people sit on chairs, and starving inmates of hostels eat rich food in good hotels and so on. These are the years to watch. Do not, I repeat do not, convince yourself that you are too busy, or that you do not have access to facilities, or worst of all, that you do this to relieve the stresses of a professional career. A professional career is indeed very stressful. There is only one person who can help you to cope with the tension, avoid the doctor's scalpel, and to feel good each morning - and that is yourself. God has given us as good a health as He has, a bit like a credit balance in the bank. Grow it, maintain it, but do not allow its value destruction. Thepenalty is very high in later years.

6 Direction is more important than distance -Every golfer tries to drive the ball to a very long distance. In the process, all sorts of mistakes occur because the game involves the masterly co-ordination of several movements simultaneously. The golf coach always advises that direction is more important than distance. So it is with life. Despite one's best attempts, there will be ups and downs. It is relationships and friendships that enable a person to navigate the choppy waters that the ship of life will encounter. When I was young, there was a memorable film by Frank Capra, starring James Stewart and Dona Reed, and named IT'S A WONDERFUL LIFE. It is about a man who is about to commit suicide because he thinks he is a failure. An angel is sent to rescue him. The bottom line of the film is that "No Man is a Failure Who Has Friends". Conclusion My generation will never be twenty again, but when you are older, you can and should be different from my generation. Ours is a great and wonderful country, and realising her true potential in the global arena depends ever so much on the quality and persistence of our young people.

Good luck in your journey, my young friends, and God be with you.

Regards

GARVIT DAVE

Keep the Spark Alive!!!

Keep the Spark Alive

There are few days in human life when one is truly elated.. I call this excitement, the spark within you that makes you feel truly alive today. Today I am going to talk about keeping the spark shining. Or to put it another way, how to be happy most, if not all the time.

Where do these sparks start? I think we are born with them. like 3-year old boy have a million sparks. A little Spiderman toy can make them jump on the bed. They get thrills from creaky swings in the park. A story from daddy gets them excited. They do a daily countdown for birthday party – several months in advance – just for the day they will cut their own birthday cake.

I see students like us, and I still see some sparks. But when I see older people, the spark is difficult to find. That means as we age, the spark fades. People whose spark has faded too much are dull, dejected, aimless and bitter. Remember Kareena in the first half of Jab We Met vs the second half? That is what happens when the spark is lost. So how to save the spark?

Imagine the spark to be a lamp's flame. The first aspect is nurturing - to give your spark the fuel, continuously. The second is to guard against storms.

To nurture, always have goals. It is human nature to strive, improve and achieve full potential. In fact, that is success. It is what is possible for you. It isn't any external measure - a certain cost to company pay package, a particular car or house.

Most of us are from middle class families. To us, having material landmarks is success and rightly so. When you have grown up where money constraints force everyday choices, financial freedom is a big achievement. But it isn't the purpose of life. If that was the case, Mr. Ambani would not show up for work. Shah Rukh Khan would stay at home and not dance anymore. Steve Jobs won't be working hard to make a better iPhone, as he sold Pixar for billions of dollars already. Why do they do it? What makes them come to work everyday? They do it because it makes them happy. They do it because it makes them feel alive. Just getting better from current levels feels good. If you study hard, you can improve your rank. If you make an effort to interact with people, you will do better in interviews. If you practice, your cricket will get better. You may also know that you cannot become Tendulkar, yet. But you can get to the next level. Striving for that next level is important.

Nature designed with a random set of genes and circumstances in which we were born. To be happy, we have to accept it and make the most of nature's design. Are you? Goals will help you do that.

I must add, don't just have career or academic goals. Set goals to give you a balanced, successful life. I use the word balanced before successful. Balanced means ensuring your health, relationships, mental peace are all in good order.

There is no point of getting a promotion on the day of your breakup. There is no fun in driving a car if your back hurts. Shopping is not enjoyable if your mind is full of tensions.

You must have read some quotes - Life is a tough race, it is a marathon or whatever. No, from what I have seen so far, life is one of those races in nursery school, where you have to run with a marble in a spoon kept in your mouth. If the marble falls, there is no point coming first. Same with life, where health and relationships are the marble. Your striving is only worth it if there is harmony in your life. Else, you may achieve the success, but this spark, this feeling of being excited and alive, will start to die.
One last thing about nurturing the spark - don't take life seriously. Don't be serious, be sincere. This quote has defined my work ever since. Whether its my job, my relationships or any of my goals. There is heaps of praise, there is intense criticism. If I take it all seriously, how will I grow? Or rather, how will I live? Life is not to be taken seriously, as we are really temporary here. We are like a pre-paid card with limited validity. If we are lucky, we may last another 50 years. And 50 years is just 2,500 weekends. Do we really need to get so worked up? It's ok, bunk a few classes, goof up a few interviews, fall in love. We are people, not programmed devices.
I've told you three things - reasonable goals, balance and not taking it too seriously that will nurture the spark. However, there are four storms in life that will threaten to completely put out the flame. These must be guarded against. These are disappointment, frustration, unfairness and loneliness of purpose.

Disappointment will come when your effort does not give you the expected return. If things don't go as planned or if you face failure. Failure is extremely difficult to handle, but those that do come out stronger. What did this failure teach me? Some students kill themselves over low grades – how silly is that? But that is how much failure can hurt you. But it's life. If challenges could always be overcome, they would cease to be a challenge. And remember - if you are failing at something, that means you are at your limit or potential. And that's where you want to be.

Disappointment's cousin is frustration, the second storm. Have you ever been frustrated? It happens when things are stuck. This is especially relevant in India. From traffic jams to getting that job you deserve, sometimes things take so long that you don't know if you chose the right goal. Frustration saps excitement, and turns your initial energy into something negative, making you a bitter person. How did I deal with it? A realistic assessment of the time involved – movies take a long time to make even though they are watched quickly, seeking a certain enjoyment in the process rather than the end result –Remember, nothing is to be taken seriously. Frustration is a sign somewhere, you took it too seriously.

Unfairness - this is hardest to deal with, but unfortunately that is how our country works. People with connections, rich dads, beautiful faces, pedigree find it easier to make it – not just in Bollywood or cricket but everywhere. And sometimes it is just plain luck. There are so few opportunities in India, so many stars need to be aligned for you to make it happen. Merit and hard work is not always linked to achievement in the short term, but the long term correlation is high, and ultimately things do work out. But realize, there will be some people luckier than you. Let's be grateful for what we have and get the strength to accept what we don't..

Finally, the last point that can kill your spark is isolation. As you grow older you will realize you are unique. When you are little, all kids want Ice cream and Spiderman. As you grow older to college, you still are a lot like your friends. But ten years later and you realize you are unique. What you want, what you believe in, what makes you feel, may be different from even the people closest to you. This can create conflict as your goals may not match with others. . And you may drop some of them. Cricket captains in college invariably stop playing cricket by the time they have their second child. They give up something that meant so much to them. They do it for their family. But in doing that, the spark dies. Never, ever make that compromise. Love yourself first, and then others.

There you go. I've told you the four thunderstorms - disappointment, frustration, unfairness and isolation. You cannot avoid them, as like the monsoon they will come into your life at regular intervals. You just need to keep the raincoat handy to not let the spark die.

But I also hope that ten years later as well, your eyes will shine the same way as they do today. That you will Keep the Spark alive, not only through college, but through the next 2,500 weekends. And I hope not just you, but my whole country will keep that spark alive, as we really need it now more than any moment in history. And there is something cool about saying - I come from the land of a billion sparks.

Thank You!
Regards
Garvit Dave

Reservation or "Reserve Nation"

We all are aware of our reservation systems for education. Some are for it and some against it. There is no right or wrong. Some believe that India can grow faster and some feel that it would take a much longer time for us to grow if reservations continue.

Lets look at the current scenario:

I am not against reservations, but at the same time I am against the way they are being implemented. I am against the way reservations became a vital card in the politics of India. I am against the criteria used to give reservations… I am against the current system of reservations and not the reservations as a whole.

The current system:


· Reservations are based on caste - I agree that in rural India, the caste a person belongs to almost everytime also speaks about his economic conditions, but its still very wrong to say that all the forward caste people can afford good education and that caste is the only feasible criteria to implement reservations! Reservations by caste only propogates casteism and delays the process of achieving a caste-free society.

· Ever increasing - When the reservations were first proposed, there was a plan to eliminate them gradually. Politicians or the few ill-minded people never let it happen. Moreover, new ways to increase reservations are being discovered, mostly aimed at gaining some political mileage and not with the aim of helping someone. Reservations need an elimination plan.

· The richer get richer - Those who took advantage of reservations once, take advantage of them again and again. How many people in rural India (those who actually need facilities and help) know about reservations at all? I know people who have studied in the same school as I did, enjoyed all the facilities I did but still had the benefits of reservation!

· Wrong place - Is reserving seats in the graduate and post-graduate colleges the best form of support? Should that not go to lower levels? If a person is not educated enough to fly a plane, you can’t recruit him to fly a plane just becuase you have already recruited 5 people and the next 5 should be from OBC, SC or ST. Necessary qualification is always a must! The right way to address the problem is to act at lower levels - but such things do not carry as much visibility as the reservations do… hence, not enough motivation for the leaders to do it!

What politics and Politicians Say:

Terming the Centre's proposal to provide reservation to minorities in premier institutes like IITs and IIMs as "dangerous and divisive", BJP on Friday said such a move would create "social tension and mutual distrust among the communities" with serious implications.

Terming the Centre's proposal to provide reservation to minorities in premier institutes like IITs and IIMs as "dangerous and divisive", BJP on Friday said such a move would create "social tension and mutual distrust among the communities" with serious implications.
"It shows how divisive the UPA government's thinking is. Instead of implementing a socio-economic agenda for the development of minorities, the government is playing a cheap political game," said party vice-president M Venkaiah Naidu at a press conference.

Pointing out that courts had struck down the minority status of Aligarh Muslim University and Andhra Pradesh government's ordinance on Muslim reservations, he said quotas based on religion were fraught with dangerous repercussions.

"If the same trend continues, it will lead to sowing the seeds for demand for another Partition in future," Naidu said adding that his party would oppose 'tooth and nail' any move to introduce quota system in IITs and IIMs.

Reservation is merit if this happens:


· There is a proper elimination plan. If any one among the parents took advantage of reservations their children should not be allowed to claim reservations. That does include the grand children when grand parents used the reservations.
· Economic conditions - I am very much against the caste based system. Reservation based on economic conditions would help reservations reach the people who need it and would also help maintain a balance between the rich and the poor.
· Government should concentrate on better facilities at lower levels. I and many others would not mind paying multiples of the education cess that we currently pay!

I hope Government is efficient and comes up with a plan to make reservations advantageous and benefit the needed. Thank you

Do you think reservations in the private sector will affect the ability of the companies to compete effectively?
As mentioned that, reservations can be a benefit if it happens in a proper way, I feel they would not affect the companies to compete. But if it happens just a place for someone who has sufficient benefits in the society, then it would cripple the companies to a great extent.

Thank you

Garvit Dave