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Old March 1st, 2007, 11:02 AM
HarHarMahaDev HarHarMahaDev is offline
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Re: 2007 India Budget

Quote:
Originally Posted by sgars
What was even more funny was the reaction of Gurudas Dasgupta. he said that nothing had been done to contain i=the infflation and in the next breath said that service tax had not been raised. Now would not raising service tax cause more inflation!
Inflation is measured by indexing a basket of goods. The government can conveniently swap items within that basket to fudge inflation statistics. The REAL inflation is far higher than 6% (as suggested by the govt, which is a high figure by itself).

If the growth is 9%, out of which 6% is contributed by inflation, then that does deflate the GDP numbers, right?

The dictionary meaning for inflation is increase in money supply. Money supply is increased through credit creation and money printing.

For e.g. the government decides to bail out oil companies...so if offers them Oil bonds of 10,000 crores. What is the real physical transaction? They are giving IOC and other govt run enterprises 10 year notes (pieces of paper which offer 6-7% interest rate). These companies sell these notes on the stock exchange and get cash!

Who is now paying the interest on these notes? The government using tax money.

Now think about this - oil is used more by rich people to power their cars. Oil is used by taxpayers as well as tax evaders. But the subsidies are funded by taxpayers exclusively. Which means, TAXPAYERS ARE POURING GAS INTO THE TANKS OF TAXEVADERS.

If there is a shortfall, they just print money and give it to the banks who then give it to the check-bearer. So what is wrong with that? There is a lot more rupees in the market chasing the same basket of goods. That causes prices to shoot up.

However, private companies and industries use technology and efficient processes to achieve economies of scale. This brings prices down. That is good. But the good deeds of private enterprise are completely watered down by the reckless deeds of the government!!

Take a look at these stats:

How did the govt spend the money last year:

Few things:
Grants in aid to state govt8656013.43845Tourism3640.056511Rural employment290704.51312Food, storage and warehousing245863.816979Water supply and sanitation22330.346673SC/ST358.20.055611General Ed187952.917925Sports4790.074365Arts6810.105725Medical and public health40610.630471Interest payments15069123.39479Defense540868.396856Admin services188992.934071Parliamentary and fiscal57560.89362

Worth noticing how much money we spend on interest payments. This is not because of population explosion or other stuff...this is because of decades of poor economic planning!!!

Anyways..this is one person's pov
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