India’s incredibly volatile inflation rate!

March 20, 2009 — drsubrotoroy

Some months ago India’s inflation rate was said to be the highest it has been for decades and now today, right on cue, it is said to be the lowest it has been for decades!   Today’s business press says Dr Manmohan Singh’s chief economic policy aide has apparently immediately expressed his keenness to see an even further purported “fiscal stimulus package” (aka pork-barrel politics prior to an election).

For myself,  I have long given up on the credibility of such stuff emanating from our capital’s supposed policy-makers — putting it down, generally speaking, to what I consider and what  I have called “New Delhi’s intellectual and moral bankruptcy”.

Here are two simple crude alternative ways to measure India’s (long-term trend) inflation-rate:

1.  Take the Money-Supply Growth Rate, say 22% per annum, subtract from it the Growth of Real National Income, say 7%, get, hmmmm, 15%.

2.  Find C&AG data for a series of several years; read off nominal expenditure on a dozen major heads of government bureaucracy (like “Central Secretariat”); calculate an average rate of growth of nominal expenditure on bureaucratic departments.   On an assumption that Government of India  bureaucracies, especially useless unproductive ones in New Delhi, seek to maintain their real consumption-levels, that growth of nominal expenditure reflects their beliefs about the actual change in the cost of living or decline in the value of money.   Oddly enough, quick calculations of that amount to, hmmmm, 15% again!

For those who prefer to believe what emanates from New Delhi’s  pretentious  economists wallowing in their own ignorance, I wonder, as I said  a couple of years ago on The Statesman’s frontpage, might I interest you in a marble structure in Agra, or perhaps a steel bridge over the Hooghly River, very famous, like Brooklyn Bridge itself….?

Subroto Roy

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Posted in asymmetric information, Economic Policy, Economic quackery, India's Government economists, India's bureaucracy, India's corruption, India's Economic History, India's Government Expenditure, India's inflation, India's Macroeconomics, India's Monetary & Fiscal Policy, India's political lobbyists, India's pork-barrel politics, India's Reserve Bank, Inflation, Manmohan Singh, Mendacity in politics, Money and banking, Political mendacity, Pork-barrel politics. 1 Comment »

One Response to “India’s incredibly volatile inflation rate!”

  1. Sunil K. Aggarwal Says:
    April 30, 2010 at 1:43 pm

    Pay hike bonanza’s to the govenment sector employees in V and VI pay commission is mostly an easy official bribe for staying loyal and not applying much mind on the jobs assigned .


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