Interest-rates, INDIA and the US... And, FDI in multi-brand-retail...

Article;

Its the right time for RBI to go for rate-cut.

Comment;
The article makes sense because lower interest rates will help improve the supply-side... In a supply constrained economy like INDIA, lower interest rate to increase incentive to invest and remove bottlenecks is not a bad idea... Higher supply in the next period will lower the general price-level... In the same economy people must have higher per-capita income to secure the supply... Indian is a poor economy, demand is not a problem but people do not have money... Higher economic growth will boost per capita income, demand and supply; prices will go down in the future... The RBI should increase its inflation target for 2016 from 6 to 7 that will give time to reduce inflation and improve the supply-side... In the medium and long-term prices will fall with supply-side improvements...

FDI is also investment...same as domestic... In a supply constrained economy a little higher inflation target looks consistent... FDI too would stoke inflation... Foreign investment will crowd out domestic investment and profits... 

Article;

Fed-hawk - US risks falling behind curve on inflation Richard Fisher. 

Comment:

Fisher's (Irving) quantity theory of money has failed... The data for economic-growth, prices, and, employment for the last 50 years points the failure of the theory... The trend has been high money-supply (means more supply of good), high employment, and falling prices because supply is increasing... Inflation should control high-demand and lower inflation should create demand…

Article;
NDA may rethink FDI retail-policy, further discussion needed says BJP.

Comment;

The interest rate differential between INDIA and the developed would keep the cost of FDI for foreign firms in terms of investment low because interest rates in the developed world are near zero... If Indians borrow abroad at low rates and invest in the retail-space that would be more profitable... It will reduce the comparative advantage of the foreign firms because they are capital rich; means capital is cheap in the developed world... Indians should borrow abroad... It will also improve our foreign exchange reserves...