Monday, April 02, 2007

nightmare on dalal street

apr 2nd, 2007

darn. 5% of investor money wiped out by excess tightening of the screws by the RBI, following the prescription: reduce growth to cure inflation.

it does not seem to occur to people that inadequate supply can be improved by investing that $120 billion sitting uselessly in us t-bills into infrastructure.

the problem is that there is too much money chasing too few goods, especially food items. world prices for wheat, corn, etc. have risen partly because of diversion into ethanol. at precisely the same time, india has become a net importer of wheat.

i repeat, we ignore agriculture at our own peril. there is nothing more important than food security. we do not want to return to those PL-480 days when shipments of not-quite-human-edible american corn flour were eagerly awaited.

1 comment:

sansk said...

This just confirmed my worst nightmares...that India is now run by genuine loser economists.

Dark times are certainly ahead.