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Showing posts with label Products. Show all posts
Showing posts with label Products. Show all posts

Restricting Demand of Products to contain Inflation

Restricting Demand of Products to contain Inflation

By Dr. Lalit Kumar Setia |  @drlalitsetia  |  drlalitsetia@gmail.com  |  November 13, 2018 9:30 a.m.
The control over inflation by restricting demand of goods and services, in itself is an intervention of central bank which affects adversely in long run. Let’s take an example, suppose the government imposes more taxes in form of Goods and Services Tax or other indirect taxes; definitely it will reduce the inflation and also fill the basket of the government with a lot of revenue but at the same time, due to higher cost being afforded by the consumers, the overall demand of the goods and services will be reduced which will give indication to the suppliers to produce less and employment opportunities will reduce significantly.

What can be done for long-term appreciation in value of a currency?

The real secret of appreciating the currency is to provide a friendly environment to the farmers, manufacturers, producers, and service providers by reducing the taxes, appreciating their efforts both in monetary and non-monetary incentives, attracting foreigners particularly the innovators to come and live in country, and providing sufficient autonomy to grow the businesses. The reservation in employment and education, the subsidies to poor people, and benefits to a particular category of people also affect the economy in negative sense because in order to get such benefits or in order to stay with such benefits, the people become less productive which ultimately harm the progress of nation. The high cost of living, high cost of setup business plays a great role in discouraging the talented people for staying in the country. A large number of Indians are being employed in rich countries and making them richer due to high cost of living and high cost of setting up businesses in India.

What does rising rate of Non Performing Assets indicate?

The Non Performing Assets of the banking sector are the result of non-availability of friendly business environment and the rise in NPAs during last one decade also indicates how India is going down and down in production, manufacturing and providing services at reasonable cost. Higher the cost of business, high the rate of NPAs will be. Instead of focusing upon making rules strict, it is more important to focus upon providing credit facilities at less rate of interest.

Why Indian Rupee is depreciated in last few years?

The value of dollar in terms of rupees in the year 2008 was only Rs. 39.42 while it is now almost near to Rs. 75 just in last one decade. Instead of too much Foreign Direct Investment (FDI), the India lost the value of currency because the Indians have become addicted to spend more money on products and services being provided by the foreign companies. The Multinational Companies (MNCs) are exploiting the resources of the country to a great extent and making India poorer. It is time to think about a new strategy to restrict the over-exploitation of resources by the MNCs and promoting the companies and businesses being run by Indians. 
*Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

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