Inflation - What the hell is this ?

What is Inflation ?
Inflation say that general level of prices are going up. For eg: A Kg of rice which was brought at Rs.10 some 4 months back is brought at Rs. 20 now. There is an increase in the cost of the commodities. So inflation means that more money need to be paid for the same goods and services. Inflation are measured regularly and this give the economic status of the country. If Inflation is increasing, then there is problem. The common men is buying a product at a higher cost.

Even the counter of inflation is dangerous, The Deflation. Yes, think a common man is paying very less for buying a products. Let say he pay currently Rs 5 per Kg of rice. The producer of the product is not profited. Government will get less money on tax and the money circulation is reduced.

So generally it is good be in a stable prices for a stable economy. Lets get to the actual part. Currently India is under a inflation at 7.33%. So Indian economy, that is we are in problem.

How inflation is caused ?
The reason behind this is because of lot of money in the market. Since the common man is having lot of money there is will to buy goods. Too much money chasing too less goods. So the goods are increasing. ( Yes obviously the producers of the products will check for right time to get profit). So if the will of buying goods is growing faster than amount of goods that have been made, then prices will go up. This most likely happens in economies that are growing fast. Currently we are in growing economy.

Also the higher prices would be due to increase in the crude oil prices which are determined in the West.

What Inflation will cause ?
Inflation have different causes on different set of people in the economy. Obviously the cost of the commodities will increase. So the common men are affected. But think this way, money flow have increased because individual salary have increased. Even if the commodity price have increased, the individual is able to afford it because his salary is increased. But What about the people who live on daily wages. This section are obviously going to get affected. Also People living off a fixed-income, such as retirees, see a decline in their purchasing power and, consequently, their standard of living.

The Producers are gaining currently at increasing inflation but at future they will suffer a bigger loss than the current gain. Goods will be produced at the same rate, while the consumer ( the common men) will reduce to spent due to high rate and he will wait to get the price to lower. So there will instability in the economy on Demand Supply cycle.

If the inflation rate is greater than that of other countries, domestic products become less competitive. Hence the domestic products at the future will start losing to the foreign goods. This will hammer the domestic and small industries in India against the branded foreign goods on prices.

What is happening to stabilize it ?
To add here, one reason which we can say the reason for the inflation is the Union Budget. It had lot of proposal like Farmer loan waiver, Tax exemption which make a lot of money inflow to the consumers. Eventually the consumers are driven to buying the goods at a rather unexpected quick phase. Hence there was a sudden higher inflation.

Both the FM P.Chidambaran and RBI governor Dr. Y.V. Reddy are working on to tighten the money in flow in the Indian economy. The major one of it was RBI have ordered all the banks in India to increase the reserves in each bank. The cash reserve ratio (CRR) which was at 7.5 % have been increased to 8.25%. This change will make sure around Rs. 18,000 crores (not sure of the figure) will be stored as reserves in the bank and the money circulation will decrease. This means the lending for the banks will decrease in this time.

Also Interest rates were reduced. Higher export tax are imposed on basmati rice and steel products and certain import tax are scrapped to safeguard domestic products. Some more policy from RBI would help in getting inflation in a right path.

What is the future ?
What is there in it. The inflation will take some time to settle down. Buying will reduce but not completely. Money flow will get stable, prices will get stabled. Obviously stock market will get back to growth. Once these happen, buying of stocks will happen. So after inflation get settled, then Indian market and economy will be right place for trading.

Every fast growing economy will face a inflation due to sudden money flow. It is how the government tackle it. If tackled without disturbing consumers tendency to buy, then it is going to positive. Wait for the last quarter of year end.

To conclude "Indian Economy is heading in the right path."

Village Voice - New place for BPO !!!!

So here is the time for village too. Is the BPO only for cities?
No more it is. Village have it voice too. Twenty two year old graduate from a small village in Tamil nadu with all dreams flew to Chennai for his future. The future he and his family were aspiring for. Software profession, a bulk pay package, happy living, good ambiance.....etc. The dreams never stopped. But Chennai as many know, welcomed him with less pride. He who thought for a right future was muggled up with the unemployment. His future is and was lost.

This isn't the case anymore. One who said " I went to chennai with ambition of job in Infosys or Wipro, but did some odd jobs for a just a living in chennai " is now saying " I am employed, support my family, still i am with my family not in chennai. But i still do the same ambitious work which i was a dreaming.". This is not some disgruntled employee moaning about his Career graph. But this is the words of an employee who is working in Rural BPO. A Team lead for a team of 10 members.

Rural BPO is growing as a definite potential to change the face of rural India. Though currently viewed as social work for rural people; it is a sure shot to grow to a real business which bulk profit similar to what the big firms are making. For the rural India, these kind of BPO are there addressing the unemployment of rural area and also countering the migration of people to urban areas. These BPO do give a social status to all who work.

Jayaram K Manivannan The man in charge of Hyderabad based Byrraju Foundation's rural BPO initiative, GRAM IT, believed by many as the pioneer of this concept say that 25% of 500 employee in his BPO are the one who have returned to their village from various cities and towns. Sai Seva (Serve and Inspire Simple Employment for Village Advancement) BPO was started by the management students of Sri Sathya Sai University in May 2006. “Our idea is to help educated rural youth upgrade the quality of their lives without destructing the cultural fabric. We aim to hold back the youth from migrating to cities by providing employment here in villages,” said Mr Prashanth R., director of Sai Seva.

Sai Seva recently got a major boost when HDFC Bank decided to outsource part of its work on data capture and profiling of new account details. This means that if you happen to open a new account with HDFC Bank, chances are that your profile and personal details will be indexed at Sai Seva BPO in Puttaparthi. HDFC Bank’s head of operations, Mr A. Rajan said his bank would initially outsource about 30,000 applications to Sai Seva and might later scale up to 3 lakh. Currently, the bank’s data capturing and indexing of customer details is done in-house by some 1,000 employees spread across Mumbai and Chennai.

So, What is the cost advantage that a rural BPO enjoy over its urban counterpart ? Manivannan explains: One obvious differential is Salary. An employee in rural BPO earns a gross salary of around 4,500 - 5,000 which is less than half of what his urban peers take home each month. The other is rental and infrastructure. On a average, Rural BPO offers its client a cost advantage of around 40-60 per cent as compared to larger cities. Also these BPO don't have a night shift and have not faced any attrition so far.

Though these Rural BPO are profittable business, most of these BPO are pioneered by social organisation. "Our Rural BPO ideas was born out of need to create an economic surplus for our initiatives like healthcare services, rural education, rural sanitation. GramIT is a social initiative" says Manivannan. Sai Seva business solution was a mix of business and social factors. Any way at the end of the day, business has to make sense. If so the social side will automatically get fulfilled.

Rural BPO though slow will gain and evolve to a business model and the Indian villagers could see this a new opportunity for employment.