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Wednesday, 14 December 2011

Inflationary Woes



My house help yesterday asked for a salary rise citing the increasing prices as the reason. It then struck me that inflation is actually now affecting at the grass-root levels. Inflation in India has been historically measured as the percent change in the wholesale prices as opposed to the world which measures the price change in consumer prices. Thus the trickledown effect of the price increase is lagged in this part of the world. Inflation since the start of this financial year has been close to double digit levels. In October the inflation was 9.73% as compared to the October of last year; which means that as compared to last year, prices on an average have increased by 9.73%.
Most of this price rise has been attributed to imported inflation in the form of oil imports and food inflation. Increasing rural incomes and standard of living has pushed up the overall domestic demand. The rural economy is generally doing well, (with a good monsoon season and a good harvest) and higher disposable incomes are increasing demand for food and white goods. As demand increases, prices increase in the short run as supply does not catch up with demand.
While on one hand a ‘comfortable’ level of inflation implies that the economy is growing; a high level of inflation might give mixed signals to investors. A comfortable level of inflation is the threshold level (decided by the central bank of a country; for India that level is 5%) of inflation that is targeted not to cross. Inflation reduces the value of your money; thus every marginal increase in your salary may not equal any value addition!
So how does one hedge one’s income in such an inflationary scenario? Well, for starters, start investing from the day you receive that first salary check! (Sounds too ideal, but trust me folks, life is a bed a roses only till your dad foots all your bills!!). Now before I start sounding too idealistic or pessimistic, let me say that I did not invest my first salary check either! However, I do believe in investing wisely now.    
Trust me, when I discussed this investment bit with my house help, she gaped at me for a long time, and finally (after much thinking) told me, “So it’s settled then, Rs. 100 more this month onwards…”


Tuesday, 6 December 2011

The city that never sleeps



“This city never sleeps….”
“Great, then we’ll see you tonight”. Finally after almost a month two of my friends were meeting us over dinner. We planned to keep things simple and decided to go to some non-fancy place (since it was a working day). As luck would have had it, some of us got late and we had to post-pone our dinner time.. We stretched it to almost 2300 hrs.! (But considering you live in today’s age, 2300 hrs. doesn’t seem that farfetched anymore!)
My friend had just recently purchased a car and we decided to drive down all the way to Tardeo from the suburbs. Now on at a normal time of the day this would have taken us about 2 hours, but since it was nearing mid-night, we reached Sardar’s Pav-Bhaji, Tardeo within no time. What amazed me and made me write this blog today is that even at that odd hour, this place was teeming with gluttons! And the waiter told us it would take about 15 min to get a table! By then our hunger did not give us a choice and we waited…soon enough victory was in sight and we made our way through a lot of stuffy mouths, smiling, welcoming faces to our seat…
Trust me one would not really venture into this place all alone, if not in a group. it takes effort to ignore the hygiene, and since we were those who prefer to sanitize our hands instead of washing them.. it took us more than ignorance to have dinner there..(we were definitely very, very hungry!!). after making ourselves (un)comfortable, we hit a masterstroke! We actually asked the waiter, “Bhaiyya khane mein kya hai?” (“What’s on the menu tonight?”); to which he answered matter-of-factly “Pav Bhaji” (mind you it was very tasty).  None of us even looked once at our watches. Now it was time for some desserts and we headed to Haji Ali juice center, gulped some of their delicious crème and were busy talking, generally enjoying the open sea breeze; only to realize it was 2 o’clock in the morning when the guy told us it’s the “last order for the day”! The city was up and about even at that time… there were about 50 odd families enjoying the crème and juices besides us!
Mumbai, Bombay, Bambai; call it what you want; the spirit of this city is always alive. As we bade each other good-bye, I was singing in my mind “Am Alive…”