The Money Chakra..!!

In a developing economy, monetary policy has a unique role to play. The aim of Monetary Policy is to have power over the supply of money, often targeting a rate of interest for the purpose of encouraging economic growth and stability. The official goals usually include relatively stable prices and low unemployment.

Money isn't everything... But it ranks right up there with oxygen..!!

The control of monetary policy cannot be handed to politicians with motivation to think for the short term. We are witnessing such a political crisis where our governments have no clue about the disasters they will face which were seeded by them in the near past.

On the other hand, it seems that the Governor of Reserve Bank of India have the operational freedom to practice its mandated goal but the final decision on policy is be decided by a monetary policy committee rather than the governor alone. A majority of the members of this committee are generally appointed by the government. This increase government control over monetary policy.  In the recent Indian context it is noticed that the system provides more than enough room for uncertainty, given the way institutions have been systematically destroyed by political appointments in past few years and giving favors thereafter. It is not ridiculous to say that the government of the day packs the monetary policy committee with people who will bend to its will.

Inflation is taxation without legislation. It adversely affects the purchasing power of people. Especially food price inflation affects the poor and the low income groups harder than the higher income groups. The inflation is not due to supply blockage in food grain. In fact, food grain production in India has reached a record production year after year. The event is recognized to large scale diversion of crop land to bio-fuel production, lose money policy, fiscal credulity and rise in fuel prices. Fuel price has definitely contributed to food price hike in India. But the other reasons do not apply to the Indian economy. Deficit financing is on a harness. So is monetary policy. In order to discipline the rising food price index, the RBI is trying to control money supply in the economy by raising repo-rates which discourages investment and encourages savings, thereby dropping demand. However, the increase in the interest rate has done little to control food inflation. On the contrary, costlier loan has held back the growth rates of Gross Domestic Product and industrial output.

Over a fixed time horizon, inflation expectation is a mirror which shows the credibility of the monetary authority’s commitment to stated objectives. The effectiveness of monetary policy is likely to be greater if inflation expectations remain secured. A sustained rise in expectations in the short-run runs the risk of heightened inflationary pressures in the medium-term. Hence, central banks have an incentive to understand how inflation expectations are formed. It is widely believed that imperfect information regarding central bank intentions has been one source of inaction in the formation of inflation expectations which happens due to leverage of government over the institutions like RBI. It’s a high time that the conduct of the monetary policy should be handed to technocrats who can take the longer view rather than politician who always intended to think for the short term. The basic issue with the monetary policy is time-inconsistency problem, which in practical terms often means increasing tolerance for inflation in pursuit of growth. Such unfairness can be minimized only when there is nominal government leverage over monetary policy. 

To listen is an effort..!!

Everything has been said before, but since nobody listens we have to keep going back and beginning all over again. This is very common and stupid example that we all have experience in our day-to-day communication. I had never thought that, I will write something on “listening”. But the first few days of my job encouraged me to concentrate on this part of communication process, after all which boss in the world would like to repeat his instructions again and again in front of his subordinates.

Listening is a magnetic and strange thing, a creative force. The people who listen to us are the ones we move toward. When we are listened to, it creates us, makes us unfold and expand. But still it is the most underestimated factor which is overlooked by all age groups. While interacting, people often are not listening attentively to one another. They may be distracted, thinking about other things, or thinking about what they are going to say next (the latter case is particularly true in conflict situations or disagreements).

I often wonder that what can be the root cause for such blunders and shared my thoughts with some concerned persons that resulted to a very interesting discussion. After an appealing discussion, I came across the two main reasons that can better be classified in two factors that very well defined the root cause of lack of ability to listen. They are:

1. Factor of Abundance: The ‘Factor of Abundance’ says that, an individual resist to listen because he perceives that he knows more than the speaker. So why should he waste his time listening to speaker. An example for the same can be noticed in a GD (Group Discussion) round where all the candidates try to fire all their ideas, opinions one by one without being concern of others view point.
2. Factor of Scarcity: As per ‘Factor of Scarcity’, an individual refuses to listen actively because he perceives that he will not be able to comprehend in the same manner in which speaker is conveying. That is because of lack of knowledge or slow thought process of listener. Example to this factor can be a classroom, where some students are very active and some seems to be completely lost.

There is couple of limitations with these factors; a) It is not a universal truth; & 2) Sometimes it doesn’t work, but exceptions are always there. But most of our problems become simpler if we take care of these factors while communicating. Listening is with the mind, it is a process which generates ideas, thoughts, attitudes and emotions. But to listen an effort is needed and just hear is of no merit.

LIVE Life and don't spend it...

"Define what happiness is to you"

Dear Friends,

Warm greetings on Diwali!

Today I would like to share a small incident that completely changed my attitude towards living a life. I was 15 yrs old sitting in front of my Guruji along with some other devotees. We were asked that when we will be happy? Someone said, "I'll be happy if I get a good job", another said "I'll be happy if I save a lot of money to secure myself and my family's future", I answered, "I'll be happy if I pass my exams well" and answers went on with almost same level of understanding.

After listening to all our answers Guruji asked us to define "happiness". We all tried but failed to answer it. Then Guruji said that the problem is that you never really taught how to live a happy life. So start thinking on it from now onwards. He refused to define happiness when asked and said that we are not that eligible to get a ready made definition because we may not accept it.

From that day onwards I often try to get the right definition of happiness and witnessed some critical observations of human beings that I would like to share with you which are surprising but very obvious. Before sharing it with you, let me also convey that even I was also the part of this observations. Some of my observations on human beings were:

1. They think anxiously about the future and forget the present, such that they live in neither the present nor the future.
2. They lose their health to earn money and then lose money to restore health.
3. They live as if they will never die, and die as though they had never lived.

And like this they forget to live life and just spend it. It may be possible because they don't know what makes them really happy or they don't know the difference between their needs and wants.

My search is still on and I don't know when it will end, but I am learning a lot in this journey that I would have missed if I had listened to the ready made answer of Guruji.