A Real Pain: Third Stimulus Package

A week ago, the acting finance minister Mr.Pranab Mukherjee said it is not necessary to announce any fiscal measures in the budget as the government is going to face general election in few months. But, within seven days he realised that, country needs a third stimulus package amounting to Rs.30000 crores.

Govt reduced excise duty by 2pc, a cut in service tax, cut in excise duty on bulk cement and many more such sops are added in the recent package. All these measures will cost exchequer Rs.30000 crores. But, in reality, will these measures put an impact on the consumption and demand pull???

Answer is BIG NO... Because these measures are insignificant. A 2 pc reduction in the excise duty will reduce the price of TV worth Rs.15000 by Rs.300/-, an air conditioner was costing Rs.25000/- will be cheaper by Rs.500/- and a flat costing Rs.24 lakh will be cheaper by Rs.12000/-, if at all the manufacturer pass on these benefits to the end consumer.

When the fiscal deficit is expected to be around 12% of the GDP. Do we really need a third stimulus package???

Eye Candy

Nah... I am not writing any page 3 article here. This one is all about flashy red buses(VOLVO) which roam around in the city of Bangalore.

During my recent trip, I got an opportunity to talk to one of the conductor of VOLVO city bus. My conversation started with asking about daily collections and break even of operating VOLVO bus in the city.

For my surprise he has given me the facts as mentioned below;

• Mileage per Litre of Diesel: 1.65 Km
• Cost of Operation per Shift: Rs.5200/-
• Revenue per shift: Rs.3500/- to Rs 4000/- (these days)
• Each bus will operate in two shifts per day and the loss amount will be: Rs. 1200/- * 2 shifts = Rs. 2400/- (on a lower side)
• There are 350 VOLVO buses run in Bangalore city as of now, generating a loss of Rs.840000/- per day.

This not an end of the story, during the period of Ex CM Mr.S M Krishna. He has ordered 1500 buses for BMTC alone as a part of the scheme “Bangalorenna Singaporagisona”. Still 1150 buses yet to come on the road, just imagine what will be the financial situation of BMTC. What a visionary Mr.Krishna is, without developing basic infrastructure he has ordered 1500 VOLVO buses.

VOLVO buses: literally an eye candy.

Who should be blamed?

It was a quite slow day in the morning, i was checking sales records and inventory position in the system, suddenly few people gathered on the road which is just opposite to my store and there was a completely packed jeep which came to a still. Mob started attacking the driver of the jeep and in few minutes he managed to escaped from the scene, for a while it was difficult to understand what was happening over there?

It took few minutes for me to figure out that it was an accident of a three year old child, who had suffered major head injury. Kid is from a nearby village called "edelli", she had accompanied her mother who is currently hospitalised in the govt hospital at Hunasagi. She came out of the hospital running to join her grandfather who was going to get medicine from the nearby medical store. Within few minutes anyone can stop her, she had become a victim of our careless society.

Completely Packed Jeep

To mention it was neither a drunk and drive case nor rash driving case. Jeep was quite slow, but driver could not see the running girl on his left side of the road, as the bonnet was completely occupied by passengers. I mean" passengers were sitting on the bonnet" and driver was given a small window to look at the road and drive safely.

Since his vision is limited only to the right side, he could not notice a running child on his left side of the vehicle. Left wheel came on the shoulder and created a major injuries on the head, child died on the spot.

Who should be blamed?

• Careless passengers who travel in a completely packed vehicle
• Driver of the vehicle
• Police, as it is their duty to ensure smooth flow of the vehicle, loaded with correct capacity
• KSRTC department which is not providing enough buses to travel

By the end of the day people had forgotten the incident and already started travelling in a fully packed vehicle again to reach their villages. Who has to be held responsible for such careless behaviour on road?

This needs a collective work to create an awareness about safety to the society, but our national media is busy in mangalore pub case and as usual govt officials are incapable of handling such issues. God knows where we will head in the near future?

LuckByChance: Finance Ministry Relieved

A sigh of relief for finance ministry as the phosphoric acid suppliers cartel broke off today in the international market. Keeping the prevailing market prices of Phosphoric acid & Ammonium sulphate, Govt Of India is planning to control the fertiliser subsidy bill within Rs.50,000 crores for the financial year 2009-2010.

We all should thank god, somehow prices of fertiliser raw material crashed to lowest level since July’08. Otherwise our beloved Finance Minister would have spent additional 150% other than the planned expenses for the fertiliser subsidy bill.

Oops! Now he is not a FM, he is a Home Minister. Don’t Know who will be responsible for the mess created by him in the finance ministry;

* Planned expenses for the fertiliser subsidy bill stands at Rs.45,000 crores for FY 08-09.
* Unplanned expenses for the subsidy bill Rs.87,000 crores(This represent extra what we spent on fertiliser subsidy).

This is just one example of mismanagement of taxpayer’s money. We will see such many more examples, when finance ministry announces Union Budget Implementation Report in the last week of February’09.

We should not come to a conclusion of deciding a good finance minister, by just looking at the strategies on paper. One should understand implementation abilities of Finanance Minister. I am waiting for the day when we can have a productive discussion on the performance of finance minister as an individual.

Where is the relation?

It was a time when inflation was hovering around 13% and govt of india took a decision to ban export of rice and all essential commodity to control the rising inflation rate.

India being a second largest producer of rice in the world, started storing its rice produce for future use. China also decided to ban export of rice at the same point of time to control the inflation number.

As the decisions of these two countries have started affecting the equilibrium of demand and supply in the international market, and which resulted in a hike of around 60% to 70% in the price of rice.

Along with the international market we started feeling the heat of soaring price of rice in India. In the beginning, Govt Of India has taken a measure of banning export of rice to curb the inflation, but today rice price has gone up by almost 60% in Indian market. And inflation figure is hovering around 5.5%, which is termed to be under control and not to worry about the inflation.

How these strategies are made? And where is the relation between rice & inflation? If at all the weight given to rice in the inflation basket is less then why such a big measure has been made to ban export of rice?