Worried about inflation – look ahead

Open the newspaper and you see one word highlighted enough number of times to irk you – INFLATION. Yes, it is rising, and Yes, a lot is being argued over how to control it.

Various economists have presented numerous solutions over centuries for such crisis. But every country is different, every economy is unique and so no one solution can be considered as perfect. Time is so dynamic that a continuous improvement and adaptation is the key. The world have moved from money crunching theories of Classical economists to government intervention measures of Keynes, and then to a mixed response of fiscal and monetary policies.

I would say, now is the time to see that the markets are extremely integrated – not just among themselves but across boundaries. Anything that affects market even a small way, can be substantial in total. Also, as the Global crisis has taught us, a disrutption in financial sector can lead to a greater economic crisis.

RBI has recently said that it wont go on with its money crunching policy for some time atleast, as there external factors ruling and driving a downturn. They may be right, the crisis in Europe is not in our direct control, and a change there would affect us no matter how we protect our economy. We can save our strength of forex for future. But should we stop completely and wait ! No. Often arguments have been on to control fiscal deficits. I would say if not able to control, atleast get more productivity in the economy to generate better revenues.

Indian economy is at a tipping point right now. There are number of successful start ups coming up in business and social sectors. This is the time to encourage them. Economy is finding ways to get funds, what we need is a smooth way to do that. The government can definitely help in this. In short run there may be pain providing for such a plan, but consider the long term – a huge nation, with a thriving economy, great manpower, rising infrastructure and more stable balance sheet. That has to be our goal.

One lesson we all need to learn – there are no Short Cuts. In economics, “Incomplete problems can hit back even harder!”

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