Inflation in Amar Colony

5 years ago when I moved into a new locality in Delhi, Amar Colony behind my residence was the nearest market one could go to for sensible shopping. But then situated in the middle of a "refugee" colony with houses built like little steel trunks stacked on top of each other, there was not much to the market. You went there only when the posher shops in GK1 markets did not provide the services or goods that you might just require - shortening a new set of trousers, colouring a dupatta, buying note books, art papers, razai or fresh samosas or locally made farsan. You get the slant.
Over the years, there has been a cleaning out process, the toy shop has become so big that Vikki, the owner, young that he is can still dream of giving Hamleys a run for their money in his lifetime, the local milk and paneer shop going by the now famous name of Gopala actually stocks Mishti Doi as well as multigrain bread, there are a few export huts where you can buy original addidas and nike at "affordable" prices, the local confectionary, Junejas, is stocked with all sorts of colourful bottles including a few of English mustard, and packets of exotic chocolates. The Nokia shop looks swank, the Coton showroom looks is full of posh ladies - the crowd of course comes down from as far as Defence Colony and GK2. The small tailor shop, the razai shop and the momowalas are still around as are the cycle rickshaws, but certaily there are more Honda cities and Corollas than Maruti Zens parked all over the place.
This is the market I frequent now and on my last visit, the toy shop known rather sweetly as KiddiLand had a queue at the entrance, inside it looks more like a godown where free toys are being distributed than a well stocked shops frequented by doting parents from Defence Colony. At the milk shop Gopala, it took around 10 minutes to get the attention of the salesperson, at the humble stationery shop at least 10 teenagers were crowding and mobbing the elderley owner. And I did forget to mention, the newly opened Cafe Coffee Day was full too. At Junejas, one had to take recourse to the elbow trick to find one's way. Even the humble but good GP who is gradually building up his practice, now charges Rs 200 at least per visit and has patients lined up.
Those who say we are hit with 12 per cent inflation must visit Amar Colony and breathe a sigh of relief. The news of inflation has not yet reached these parts.

Need Based and Want Based Consumption

Staunch believers in market forces like Dr Monmohan Singh, Montek Singh Ahluwalia and P Chidambaram have suddenly changed track and are actively colluding with non-believers in market forces to control the bogey of inflation and why not. No one minds cutting ideological corners in an election year and no one blames them for doing so. of course they would argue, as all market wallahs to this has nothing to do with market mechanisms, if it was a free market then inflation would not have happened, this is a market failure blah blah blah. No wonder we have some of the best ecomomists of the world in India engaged in the worst ecomonic policies since the days of Paul Baran [he was I think the PM's economic adviser for a short period in 1950s]

I think it is best to leave inflation a free hand rather than tinker with it. In the past tinkering with the eocnomic foces have had disastrous result and this time around we have no reason to assume otherwise.

Till a generation back we had a middle class polulation that decided to buy something only when it was a necessity. Nothing that was not desperately needed was ever bought however rich you were. And the need ot lack of it was justified in various ways..... if you are leaving in a small town why do you need to buy a car, travelling is much faster by rickshaw.... Why do u need ACs for three months in a year? just bear it out... Fridge is not a good thing the quality of food is not preserved! Cauliflowers in summer are not tasty stick to bhindi.....

They knew the value of everything

That was then, things have been different since alomost a generation.... u like it u buy it, what use u are going to put it to or if it has any use at all or not will be decided later..... best example is that of Gurgaon where the gentry have on an average 3 ACs per flat in town where there is hardly any electricity for three hours in a day. Or on Mumbai where everyone seem to have a big car, never mind if there is just one road for all of them.

We know the price of everything and value of nothing.

I find it laughable that the same set of people who taught us the principles of free market liberalisation etc 17 years back are now asking us to exercise restraint..... when we have forgotten what restraint means.

For us we have been there done that and been here doing this it's a great fun to watch all these.

If I were serious about checking inflation I would recall Kaushik basu back from Cornell and give him a freehand: )

The picture is that of Kaushik Basu taken from the internet

The Art of Forgetting

The art of forgetting is a well practiced art but quite popular in India and I have had first hand experience since I have studied one subject only form high school to my thesis: History.... When I attended the first History Honours Class in Presidency College in Calcutta, I was told that forget whatever you were taught in class 12: Aurangzeb was not a bigot, he did what was politically prudent, for example.... He was also the most honest and down to earth Mughal emperor.... Feudalism was not about knights and dames but about social processes.... OK so I forgot and moved on.... In my Masters Class in JNU I was told that forget whatever you were taught in your honours class.... history has been interpreted through narrow isms so far but it is really more complicated than that and keep your mind open... OK so I tried to follow the new guidelines and forget the old.... While doing my PhD in London [you will ask why do a PhD in Indian history in London, but that is a totally different subject for me to answer here]... I was told that PhD is the art of knowing more and more about less and less... So I had to forget larger processes that we shaping the history of the subcontinent and focus on my chosen area and time frames...

Now I see that this practice plagues most of the economists as well especially in our country and with disastrous results because economists as a lobby have more power over our lives than historians or political scientists or even physcists will ever have....

Inflation, when we were young, we were told is just a process of transferring money from one group of people to another.... in this case from fixed income groups to flexible income groups.. in our country from you to your shopkeeper.... and there is nothing inherently wrong and no one suffers during inflation if and only if there is a realtime indexed income.... so if the inflation is 7 per cent my salary automatically goes up seven per cent, so does my return on deposits, savings and everything else and the actual raise is over and above it I do not suffer at all..... so if the interest rate is 5 per cent and the inflation is 8 per cent I should get an interest of 13 per cent.... Similary if my annual salary hike is 10 per cent and the inflation is 5 per cent, I should get a salary hike of 15 per cent... But in spite of many sane economists suggesting indexation of income, savings and deposits, we have never sought this way out in our country and most of those economists probably have forgotten about their earlier solution... with the result that fixed income groups are made to suffer through indirect taxes which are passed on to them by the shopkeeper, merchant, industry, and false bank rates like 8 per cent , 7 per cent of which is eaten away by inflation.... Others are making merry and enriching themselves without moving a figer because whenever there is an indirect tax it is passed on to fixed income groups....

So the art of forgetting may be good for historians it certainly is not good for economists... for them the slogan should be back to basics...