Restoring Investor confidence

Recent financial fraud in Satyam has spooked the investor community and people are afraid to invest. Investment is based on a lot of trust in the accuracy of the financial statements. The auditors are the custodians of these valuable documents. If I cannot trust the auditors, what value can I attached to these documents. How do I value the company ?

Govt. needs to take speedy action to restore confidence in the system. The guilty should be brought to justice . New laws should be enacted to deter such events from happening.

Inflation nightmare

Along with growth comes inflation and soon inflation takes over and ultimately destroys growth. Currently inflation is hovering around 8%. Whom does it affect ? Who are the worst hit ? What is currently contributing to high inflation ?

Inflation affects everyone . Money loses purchasing power so rich are actually becoming poor and the poor cannot afford basic necessities in life. Until recently FII investment money and software export/growth was increasing money supply and increasing inflation. At present, increasing price of oil has contributed to inflation. This has resulted in increased input cost for almost all goods . There is increasing demand for oil across the globe with not enough new supply.

How is India going to tame inflation ? How are we going to reduce our dependency on oil ?

Mind the (social) gap

A recent survey points to a 17% increase in pay in 2007 and in 2006 there was a 14% increase in pay . Hey who doesn't love a pay rise ? The problem is the pay rise is not uniform across all the industries . Most of the pay rise is in IT and ITES. This creates a disparity in social/financial status of people in the society .

What is the impact? This creates a wider gap between the rich and the poor. There is flight of talent from other industries to the lucrative IT and ITES companies. Inflation moves higher because these people throw money at everything causing problems for the poor people in the society. If there is a fall in the profits of IT and ITES industry, there can be a pay cut across all the companies and I don't think this newly affluent crowd can handle it.

IT & ITES are feeling the pain of the rising rupee. The govt. should not bail this industry out by manipulating the exchange rate in the near term. This being said,we should let the market even out the disparity .This will help cool down the IT industry and help even out the disparity cause

Service Charge for using cheques

Banks are trying to come up with a service charge of Rs 15 each time someone uses a cheque. They claim that they need to pass the cost of handling cheques to the customer . This is just outrageous . Banks need to be more efficient and upgrade their systems to absorb the cost . I live in the U.S and I don't see banks charging a service charge for cheques for regular accounts . RBI needs to squash this move .

Has inflation gone out of hand?

Have you noticed how much prices have changed over the course of the last few years? Some item costs have doubled and even tripled. If you are not worried about it, you are making way too much money. Ask the common man and he will lament about his pathetic state. What is happening? How is the leadership dealing with it?

In the last decade the IT/outsourcing boom and the stock market boom has created a new class of rich middle class, who have too much money on hand .Their spending habits have caused a flood of new cash flow into the economy .This has caused all the price increases. There is lot more cash in the market relative to the goods available, so the increase in prices. What is the fate of the common man? His income has not increased and his purchasing power has reduced. Today there is a wider gap between the rich and the poor causing a divided society.

What are we doing about it? FM has focused his budget on controlling inflation but is it too late? What were we doing all these years? Is it time to raise interest rates? How about using higher taxes for the rich as an effective tool? Is the economy growing too fast that the common man is getting trampled?