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what is inflation in our nation?

Created by : ravi mahajan, MBA/PGDM student, mitcon  | 06 26 2011 09:16:37 +0000
Keywords : what is inflation in our nation?
Activity:  956 views;  last activity : 06 30 2011 21:09:44 +0000
 
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sign of prosperity Vs sign of poorty
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Inflation is related to "currency (money) value in the market". Value of money does not stay same through out life cycle. It's in the top & at times comes low. There are various factors that dictates its value in the market. Mainly the demand & supply, viz the imports & exports, decides it.

Case 1:

Suppose my salary is Rs 1000/ & Onion price at Rs10/kg. After few months, I started increase in salary say Rs 5000/. Now, the price of Onion will also go high, say, 20/kg or so. Here the earning potential & subsequently the produce in the market maintain a balance. The price hike may be due to, less production of Onion or more purchaser(consumption) or even the poor logistics to ensure adequate amount of product in the market. However, the pay increase maintain the Balance.In this case money value is less. Because for more money Rs20, instead of Rs 10, you buy 1KG Onion.

Case 2:

My salary is same and the produce of Onion is also same. But, due to illegal hording of produce, the market may force the buyer to buy the Onion at higher rate. Money laundering takes place by Onion seller(Forced demand).

Case 3:

Suppose ,still, my salary is same & Onion produce is same & there is no market manipulation by seller. But, say, more Onion is exported to out-side. This creates a short supply & the price hike goes & tempt the buyer to pay more.

In all these cases , we find, it is the "demand & supply" decides the price . So by using inflation, by no means we can ascertain that , the society is richer or poor.
By KALIYAMOORTHY , Oil & Gas Area Coordinator, Undisclosed  06 29 2011 15:40:15 +0000
 
Top Argument
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I do not see why is it sign of prosperity to you? It think if there was no inflation we would have a lot of money to do many things which today we cannot..It cannot make us rich..all it does is it takes..
By Namrata Pathak, Accounts Manager, American Express  06 29 2011 11:53:14 +0000
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Its obvious sign of prosperity. Price only increase when there is demand and demand only comes when people have money. Inflation is much better than deflation but it should be in limit where people can afford the day to day things
By CHINTAN , Security/ Equity Research Analyst, chintaninc  | 06 30 2011 21:09:44 +0000
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This is in continuation of my earlier comment that once the supply vs demand is set right the so called inflation will b minimized if not eradicated completely .
By sudhakar , BUSINESS CONSULTANT  | 06 30 2011 15:01:42 +0000
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I think it is a sign of prosperity, at least we can be happy that there are some people who have money.
By Munshi Ramchand, Retired  | 06 30 2011 14:39:37 +0000
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Inflation is the attribute of money. Money buys either "more" or "less" for its actual value. This happens when there is surplus & scarcity. When surplus exist in the market, money buys more(value high) & it buys less when there is scarcity(value less).

Inflation rates help policy makers to identify the sector where it happens & try control it so that , the RBI can manipulate the currency value with the minimum fluctuation. Suppose, inflation rate is high in Agri. industry, Govt plan to make progress / development to bring down the inflation rate. Similarly, it help decision makers to control money value & achieve an expected Inclusive Growth in Economy.

As Mr. Mohd Baksh said, the sudden flow of money(Gold selling) by a section, makes them to buy a thing over-rated. Say, a land value of Rs 600 to Rs 3000.
By KALIYAMOORTHY , Oil & Gas Area Coordinator, Undisclosed  | 06 30 2011 06:41:19 +0000
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Almost everyone thinks inflation is evil, but it isn't necessarily so. Inflation affects different people in different ways. It also depends on whether inflation is anticipated or unanticipated. If the inflation rate corresponds to what the majority of people are expecting (anticipated inflation), then we can compensate and the cost isn't high. For example, banks can vary their interest rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up. Problems arise when there is unanticipated very high inflation. Inflation is a sign that an economy is growing. In some situations, little inflation (or even deflation) can be just as bad (or worse) as high inflation. The lack of inflation may be an indication that the economy is weakening. Finally : it's not so easy to label inflation as either good or bad - it depends on the overall economy as well as your personal situation.
By Saket Jain, Country Manager - Service Excellence, APC by Schneider Electric  | 06 30 2011 05:04:46 +0000
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ok NAMRATA PATHAK its ur thinking but think once if the price of all commodity will rise people will get chance to earn more than there saving or deposit will get less and they will try to invest more in thre business...

 
By ravi mahajan, MBA/PGDM student, mitcon  | 06 29 2011 17:54:44 +0000
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WHEN TOO MUCH MONEY CHASING TOO FEW GOODS IT IS INFLATION. ONE THING I WANT TO SHARE IS THAT ANY DEVELOPING COUNTRY OR UNDERDEVELOPED COUNTRY WHEN MEASURES ARE TAKEN TO CORRECT CERTAIN ECONOMIC IMBALANCES THIS SITUATION ARISE.. IT APPEARS SOME TIME AS IF IT IS FAVORABLE AND  OTHER TIMES THE VICE VERSA. IT IS MORE IMPORTANT TO UNDERSTAND THE COMPLEXITY OF THE SITUATION BEFORE COMING TO CONCLUSION THAT IT WILL DO ONLY GOOD AND NOT THE OPPOSITE.

THERE ARE ECONOMIC IMBALANCES  LIKE AGGREGATE DEMAND AND AGGREGATE SUPPLY, SAVINGS AND INVESTMENTS. CONSUMPTION AND INCOME ,AGRICULTURE AND INDUSTRIES INTERDEPENDENCY , NATIONAL INCOME , VICIOUS CYCLE OF POVERTY, CAPITAL FORMATION,  AND MANY MORE .
By sudhakar , BUSINESS CONSULTANT  | 06 29 2011 17:00:17 +0000
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i think its a sign of prosperity for affluent class people and sign of poorty for middle class and poor people
By ravi mahajan, MBA/PGDM student, mitcon  | 06 26 2011 09:16:37 +0000
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FOR RICH MAN IT IS GOOD, BUT FOR A POOR MAN INFLATION HAUNTS HIM AS HE CANNOT SUSTAIN THE SKYROCKETING PRICES.

SURVIVAL BECOMES HARDER FOR A POOR MAN.

IT IS A DISASTROUS SIGN FOR POOR FAMILIES.


THANKS FOR REFERRAL...
By Sairam. M, System Administrator  | 08 06 2011 20:20:00 +0000
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Thanks Namrata for refering. Majot fallout of Inflation is that, the it increases black money.The money created by creating artificial shortage ultimately goes underground as black money.
By Prakash Saitwal, Technical Support Manager, Aditya Birla Management Corporation P. Ltd.  | 06 30 2011 06:20:22 +0000
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Namrata I agree with your point of view. There is inflation on every country. Particularly highly populated countries like ours. Then why the inflation in Chain is in the range of 4% but may go up to 5% this fiscal. In democracy there are fall outs which is not there in china who practices communism. which is worse than dictatorship. All these may be out of context but I think in India the inflation is within reasonable limit.
By Rathin Deb, Freelance Retail Consultant  | 06 30 2011 05:43:22 +0000
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Thanks,Namrata for referral. I do not subscribe though both views,but I am on this side as it is a voice of pinch.In present scenario,inflation is due to fluctuation in "GOLD" prices. A lot of people have brought out gold for sale in the market and are purchasing things which they could have deferred for time being.This has immensely affected the salaried people in general and people working in unorganized sector. So it is neither a sign of prosperity nor poverty, but total failure of RBI or the GOI. In short inflation is about 'CAPITAL' going on strike.
By Mohammad Bakhsh, Project Leader/Managing Consultant, Freelancer  | 06 30 2011 04:01:15 +0000
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Inflation may be sign of prosperity in only one situation when it is less then growth rate otherwise it will always a sign of poorty.
By Vinod kumar, MBA (Finance) student, Punjab College of Technical Education  | 06 29 2011 17:13:11 +0000
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Inflation is not only related with demand and suply ratio. It could be one reason. If the inflation rise, Price of goods and services will be increase. Value of our currency will decrease. Economy growth will be slow down. This will be sign of poverty. If inflation decrease it will have reverse effect of above mention things. So it will be sign of prosperity. You need not to use a currency not of 500 and 1000.......But this will not happene.
By Vrushank Bharatkumar Dave, Area Business Manager, Elder Pharmaceutical Ltd  | 06 29 2011 16:45:31 +0000
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When there is more money in economy but less production or high demand and low supplies things get costlier.It can also be a sign of high growing economy where there is so much demand that production is not able to meet it.Obviously it does make the goods more costlier reflected through wholesale price Index (WPI) and Consumer Price Index(CPI).People at the bottom of pyramid suffer mainly because of high prices dut to low incomes.

 

 

 
By Arun Singh, Astt.Manager,Business development,Abhijeet Projects Ltd  | 06 29 2011 13:26:41 +0000
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Poorty is not a correct English word rather it is Poverty. Okay now this inflation may increase the GDP or any governmental financial figures but the reality is that the per-capital income and the average lifestyle of people is going to hell. so whose prosperity is the nation's prosperity in real sense? it is the people's indeed hence I advocate Namrata's comment here.
By Ardhendu Pal, Upgrading Knowledge Base, Researching in Computer Software/Hardware  | 06 29 2011 12:58:55 +0000
Argue for "sign of prosperity"
Argue for "sign of poorty"
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ok NAMRATA PATHAK its ur thinking but think once if the price of all commodity will rise people will get chance to earn more than there saving or deposit will get less and they will try to invest more in thre business...  
thanks i posted ths on my facebook
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