Article;
Concentrated wealth only 3 taxpayers are costing real-estate sector dearly.
Comment;
To let the air come out
of the bubble (i think) the RBI needs to increase interest rates which will
also bring the demand down due to lower interest rates on home loans. Fiscal
policy has pumped so much liquidity in the system that the economy has reached
its limits pushing the prices above the roof in the face of higher wages/income.
Both monetary and fiscal can give demand a boost... Therefore liquidity is
coming out of fiscal policy. The RBI while manipulating interest rates should
also take into account the Fiscal-Deficit. Everybody is admitting that it (the
deficit) is high including rating agencies… The rate of inflation may be gauge
of liquidity in any system, we even make use of the notion that “more money
supply, more inflation”. Therefore, money supply can also be
increased/decreased through fiscal policy, too... I’ve heard many people saying
that there is a problem of liquidity but when we see the rate of inflation
(above 10%) we have a “ real-gauge of liquidity” too. I think our (new)
Governor will take fiscal deficit (too) into account before deciding for
interest rates. I think we have case for increasing interest rates…
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