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- เผยแพร่เมื่อ 28 ม.ค. 2016
- Reserve Bank of India Governor Raghuram Rajan on Friday said "dosa economics" shows how inflation can be a silent killer.
Dr Rajan used the example of a pensioner buying a dosa to explain how he can have more dosas today despite earning lower interest on his savings in bank deposits, as long as inflation stays low.
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How simply he explained the inflation & interest rates relation!! I wish we ll get teachers like him
Wow.. a 20 page concept of economy explained in 2 minutes... Raguram Rajan for u🙌
Principal=Rs 100000
Dosa= 2000 (@50)
Case A.
Int.= 10%
Inflation= 10% (P1=Rs 55)
Dosa=182 units
Case B.
Int.= 8%
Inflation= 5.5% (P2=Rs 52.75)
Dosa= approx. 152 units
Adding principal, we get:
A)Dosa's= 2000 units(Real int.=0)
B)Dosa's= approx. 2050 units (Real int.= 2.5%)
•Inflation kills principal!
How 182 units please explain
@@nikhilkaijkar4934 With the interest rate having 10% he has 10k rs purchasing power. With 10k rs he can buy 182 dosa's each costing him around 55 rs.
As,
182×55= 10,000 (approx)
Practically speaking , dosa (or a piece of land) for example, once Maximum retail price is set to 55 rupees it remains 55 rupees . I have never seen the price of dosa ( price of land ) reduced because reduction in intrest set by RBI or federal reserve bank .
Also for a person without any savings to survive this situation of inflation his salary should increase . Can any employer say because RBI reduced intrest rates so take less salary this year ? We all know Salary generally remains same or increases .
Intrest causes inflation . Inflation
Kills everything .
@@Imrankhan49986 On the contrary, if inflation takes place, nominal interest rate should go up, else it's loss keeping money in bank. If interest rate doesn't go up proportionately with inflation, we are getting negative returns from Bank.
@@shrutisingh8903 Why inflations takes place without real, practical , service based reason in the first place ? Even prices increases without any service based reason do u think people can afford it unless money is pumped into society causing value of money to be lost.
Bottom line. Someone sitting and eating without adding any value to the society means someone else has to pay for it ultimately. Nothing comes free actually. We know basic law : Matter (energy) neither can be created nor it can be destroyed but it can be changed from one form to another form . Interest causes then, poor get more poor, rich remain same or poor . Ultimately whole concept of interest collapses.
Man, such background noise. Cant people be quiet when somebody is speaking? Seriously!
idiots around......
That is the noise from the restaurant where retired persons are eating their dosas.
Bad mic
Who is after he became Tamilnadu 's economy advisory council member
Me
Me 🙋
✋
You
he is also Tamil brahmin
We lost this expert bez of government..
Meanwhile Urjit Patel is still wondering why would anybody buy so many dosas. Is it Anant Ambani's birthday bash?
Vijender Singh what's the connection between them?
Urjit Patel is no better than a puppet..
Patel was ex-employee of them
Urjit will trade dosas for dhoklas and make the number grow 10 fold and show how our economy is growing.
Vijender Singh......you have a point here.
I am here because I was looking for a Dosa recipe.
Dosa economics v/s pakoda economics.
😂😂😂😂
as usual Indian media highlights news like "train hit 5 bulls on track", "elephants killed a man in Kerala" etc... How many shows would have been conducted Economics as main point by media?
Greatly explained with easy illustration. Great economist.
+Aaron Christian
He is not an Economist at all. He studied Electrical engineering, then MBA and a PhD in stocks & bonds. He knows nothing about Economics.
Practically speaking , dosa (or a piece of land) for example, once Maximum retail price is set to 55 rupees it remains 55 rupees . I have never seen the price of dosa ( price of land ) reduced because reduction in intrest set by RBI or federal reserve bank .
Also for a person without any savings to survive this situation of inflation his salary should increase . Can any employer say because RBI reduced intrest rates so take less salary this year ? We all know Salary generally remains same or increases . So when salary of a employee never decreases generally how can the employer produce dosas or any product with reduced price?
Intrest causes inflation . Inflation
Kills everything .
He could have simply said that with 10% interest rates and 10% inflation his investments worth Rs 1 lac actually reap him no financial gains, while with 8% interest rates and 4.5% inflation his financial gains on Rs 1 lac of investments are 3.5% (8% - 4.5%)
+Dhruv Kapoor True, but that doesn't explain what is the error the pensioners are making, right? I guess he wanted to explain the fact that the pensioners are forgetting about the relative 'appreciation' of the principal due to the reduced inflation since they are only spending the interest. [Pardon my terminology related mistakes, I've not studied economics].
me bit confused initially but then itz logical to understand how high inflation actually reduce the real income despite the high return and we ask more however Inflation is a silent killer. moreover Ranjan might have wanted to convey the message using those opportunity rather than complaining.
+Dhruv Kapoor Yes, and people eat more during periods of non-inflation. Stress related eating disorders.
I thought the same. Dont know why instead of explaining so simply without an example he took the dosa example. May be there is something more to it.
CODE Hindi by Vicky Shetty He elucidated dosa example so that any layman can understand it.Not every one here knows about the inflation and indexation.If you know,then inform others.
If you can't explain simple enough,you didn't understand it well - Alber Einstein
raghuram rajan is a an awesome teacher
Great RBI
After gdp contracted by 23 , I got this recommendation .
if India has this kind lectures everywher e India will get so much educated and definitely lead the world.
So it all depends upon the inflation
Instead of just thinking about the higher interest rates , inflation must also be considered as even though the interest rates are high but if the inflation is also higher, the investor will get lower return,
And even though the interest return are lower but the inflation is not fluctuation much, the investor will get more return.
Therefore, all this basically tells us that instead of just considering returns, various other factors must also be considered as the return will ultimately be affected by these factors.
If im right please let me know by a like.
Just an amazing explanation -- no wonder he loves academics.
what the hell is that background nice. we would stay pin-drop silent when such a great person is explaining something
Someone help me understand this right..if the Interest rate is 8% and inflation is 5.5%, you would have 1,08,000 Rs(on a principal of 1,00,000 Rs) at the end of the year and price of a Dosa would be 52.75 Rs. You could buy approximately 2047 (not 2050 Dosas) in this situation. Hence the Real Interest rate is 2.35% and not 2.5%. What am I missing here?
Tindi Mania that when inflation drops real value of principal increases. even though there's decrease in quantity you could buy using just interest, the overall ability to buy increases. 2047 in low inflation low interest times compared to 2000 in high inflation high interest rate times.
Inflation reduces the purchasing power of the prirncipal amount.
Dosa prices never decreases
He also said same thing but when inflation is at 10 pct u will buy at 55,when it's at 5pct we will buy at 52.5,, he doesn't said
Yes,in reality it doesn't happen with lower inflation rate..
He describing the picture of Indian inflation and price of all goods. No only dosa
venkat manoj I didn’t get could you explain clearly 🙏👍
How beautifully you explained sir we have regret of loosing you
We didn't lose him man. Modi made us to...
Modiji made him retire
it is the time the India need you very much increase trade deficit,rupee touches life time low,banking sector under stressed.
Brilliantly explained!
The country needs Raghu Rajan at this time, Honarble Modi sir join him in your team for the boost of the economy.
We need him back as our Rbi governer
I still don't understand the model
But what's gonna happen when inflation rate is more than the interest rate??
Which is exactly what's happening in 2022..
So thought provoking, , . . .
Dt. O7.04. 2020
he is tamil thats what explain about dosa
yes he is a tamil brahmin
What he doesn't consider here in this analogy is that the dosas, after having seen the period of 10% inflation, have their prices increased at Rs.55. And when the inflation rate lowers, the prices, which haven't remained at 50, will not get lowered. Rather, they'll increase further, but at a lower rate. So, due to whichever effect this happens, the guy will not get more dosas on the whole.
+Jijnasa Mishra exactly
Before considering Rajan sir wrong.. Please check your credibility.. You have not touched the Inflation part which reduced 10% to 5.5% .. Now the Pension fund Beneficiary can buy a dosa @ 52.50/- (on inflation of 5.5%) which he suppose to pay @55 with the inflation of 10%.
conclusion of the story *When inflation goes down your Purchasing Power Increases*..
One cannot buy Dosha in the Wholesale market where inflation rate is artificially very low, artificially low at 5 percent. People buy Doshas in the stalls in a Mall, where inflation is at least 100 percent but the Government does not measure it.
Rajan does not understand economics.
*****
Dosha Masala or plain? Lie or straight statistics.
This concept is somewhat contradictory. If the interest rates on savings(or NDTL) are high, it will increase the cost of capital for the banks. Banks in turn will accordingly increase/adjust their lending rates. High lending rates will mean less money supply in the economy, which also implies low inflation.
Infact, when were having a discussion on the aforesaid theorem, one of our assistant professors at IIM Calcutta pointed it out as well.
Practically speaking , dosa (or a piece of land) for example, once Maximum retail price is set to 55 rupees it remains 55 rupees . I have never seen the price of dosa ( price of land ) reduced because reduction in intrest set by RBI or federal reserve bank .
Also for a person without any savings to survive this situation of inflation his salary should increase . Can any employer say because RBI reduced intrest rates so take less salary this year ? We all know Salary generally remains same or increases . So when salary of a employee never decreases generally how can the employer produce dosas or any product with reduced price?
Intrest causes inflation . Inflation
Kills everything .
Can anyone explain clearly about dosa economies 🙏
Fermented stuff.
Ok. But what if dosa infaltion rate not come from 10% to 5.5%? That is the erosion of weath. What exactly happing today. Banking interest coming down but food infaltion going up on constant/increase speed.
But now we are getting 6%
But, how can we be sure, inflation will be around 5%, if we keep interests as 8?`
He is talking about actual data. Between 2010 and 2013, average inflation was approximately 10%. Since 2014, the inflation has dipped to around 5% or less. And then, talking about the retirees grievance that FDR interest has come down to 8% from 10%, he goes on to illustrate how 8% FDR interest during a time of 5% inflation would actually yield more net than 10% interest would yield during a period of 10% inflation.
he is talking about term deposit interest rate not repo rate
@@jamesjapp9326 Practically speaking , dosa (or a piece of land) for example, once Maximum retail price is set to 55 rupees it remains 55 rupees . I have never seen the price of dosa ( price of land ) reduced because reduction in intrest set by RBI or federal reserve bank .
Also for a person without any savings to survive this situation of inflation his salary should increase . Can any employer say because RBI reduced intrest rates so take less salary this year ? We all know Salary generally remains same or increases . So when salary of a employee never decreases generally how can the employer produce dosas or any product with reduced price?
Intrest causes inflation . Inflation
Kills everything .
We need this guy back to stable our economy
What he does not mention is Growth and Inflation go hand in hand! Inflation is a bigger issue in the Developed World as the economy does not grow by much. A thinking - must say faulty for India, a thought process that he tried his best to implement, must say successfully within his area of influence as RBI Governor. We lost out on a Growth opportunity, of course other decisions also slowed down the India Growth story [end result, we are in our 12th year slowdown that started in 2011]. The thought process of RRR in trading Inflation with Growth did do the damage. Hardly pointed out because he has all the bells and whistles in place to be the darling of the media and the aspirational, upwardly mobile Indian middle class.
This why im telling buy 2000 Dosa with that 1Lakh, eat eat nd eat frgt abt inflation, intrest, pricipal, nd all.
If high inflation rate is 10% and interest rate 10%. But when low inflation is 5.5 while interest is 8% it should be also 5.5. Look today's scenario. Inflation is good for economy. If prises goes up borrowing are becoming less expensive because money value comes down. India is a emerging country and by borrowing youth can invest money in assets whose value will exponentially increase due to inflation. However as the inflation fluctuate the price distribution hampers.
Wait Decentralisation of moneyis happening
Now only 5.5
Just great.
Nice explanation
Damn !!
Loved it❤️
That my friends is pure love for dosas.
You dont want to loose 50 dosas
Trust me
In case inflation is not controlled?
We are so privileged to have economists like him.
Well Chicago is benefitting from him now.
@@pran10000 but now tamilnadu will get benefit from him
His example was more confusing than actually understanding the damn inflation and principal erosion thing
He is a gem of india
South campus lecture. Forced to 8? Towards Suresh drsaab.
He is not in charge of his own home Kitchen .Ask his wife thinks about his dosa or Idlli economy.
What is the primary source of inflation in any society: land rent and land price increases. The result is a redistribution of wealth from producers (e.g., actual farmers or businesses) to owners of land. In a very real sense, when a society allows the private appropriation of the rent of land, this turns all who do not own land into sharecroppers, turning over a portion of their income to individuals who control land but perform no actual service in return.
Read British economist Fred Harrison's book, "The Power In the Land" for deeper insight.
My favourite governor of rbi is Rahuram Rajan
This guy is out with his dosas..I am glad...Inflation comes down..Dosa prices don't come down..Once it is 55 it only increases incrementally once inflation reduces...So no real gain for the consumer.
True
Delhites (in the background) can never stay silent. If you've come to this conference. Then just shut up and listen na bhai.
No relieve to this country's economy as long as present salary systems active.
Government face a little relieve incase reduce 26% salary to government servants at once and gradually decrease 6% for four years.
Dear NDTV, bring my views to this country's rulers.
Dosa economics does state that our Indian economy is in trouble like elsewhere else in the world.
What I could buy when I was 10 years old with a 100 rupee now I have to spend 500 rupee. The same product A. Did my purchasing power increase or am I earning more income or did the value of rupee devalue against dollar.
With more numbers to feed roughly by 100% increase in 30 years, India produce more, consume more, need more products and services and utilities, service sector has to improve their quality, quantity offerings.
Why understand economy using taxes, interest and inflation. Use real figures to see what has changed. India's GDP has grown. Common man has more money on hand. He can save, borrow, invest both in India and abroad freely and so on.
When we look at prices, this is where our shocker is? Inflation. What had happened to supply and damand match with imports and exports put together.
90 billion dollars was repatriated back to India by the diaspora. Forex reserves are good enough to import crude and gold.
Other than standardized economy, let us look at smuggled gold inside India to the tune of 50 tons. Now do the math. How much did we pay for this crime?
Black marketers hoarding commodities in Rajasthan, artificially increase its price.
Adulteration of goods from raw material to finished goods be it food, automobiles or health care cost the economy the most.
Debt ridden industry. Who is responsible. Low key technology.? Poor quality, recycling, reusing culture going round in second and third tier industries cost the economy dearly by environmental degradation.
High tech industries with bloated share prices. Do they justify their high price, low volume and flight of capital as royalty.
Less corporate tax, more income tax and less disposable income on hand increases the prices as demand still exist but artificial supply constraints create the vacuum.
Taxes. High petrol tax when international price is down. Govt administered price Vs market driven price but extreme taxation eroded the benefit to reach the consumer. Hence price remains the same or increase.
Let's come to dosa. Even if the raw material prices go down dosa price remains the same. Check the service charge in the service sector. It comes under GST. But still service sector pricing is not normalised as it should be.
Interest rate and inflation whether based on consumer price index or otherwise is correlated as it is administered that way. If I need to have less priced dosa, either I cook at home or go to Iyer mess who is fair in his offerings and pricing so to speak.
His son studies for economics and may be tomorrow he might inflate his price stating he changed the interior decor. Period, I try to understand how the same old dosa is giving me economics lesson.
great man
Just one thing.. he is unfortunately taking about WPI and not CPI... Its a shame we are still stuck with WPI just because it gives us a number which is smaller and more palatable.. the fishers logic that he used to explain the dosa consumption problem is correct but he is surely misguiding people by not explaining why the old man is troubled.. its CPI thats troubling him and u have used WPI to calculate the real return... So yes there is a problem of ROI from deposits if one just keeps money in banks/ invests earning a nominal rate of interest @8-10% even if the official govt inflation figures are 4-5% the CPI is well above 8-10%
(I knows thats a fair bit of jargon but these small differences matter a lot.. and are used to misguide individuals)
I think at the point of time when the speech was delivered WPI was negative, that way dosa price would have come down (not possible practically though) but CPI was around 5.5 which he mentioned in the speech.
Ronak Pol He did mention CPI
he is referring to cpi only... how can you calculate dosa price appreciation by wpi?? are you stupid? cost price of dosa is being discussed
cpi was 5.5 as he mentioned
Hey Rajan ❤❤❤
Pakoda economics bhari hy dosa economics pe....
pm candidate of india
Great
I like Raghuram Rajan but I don't like this Dosa example
kuch samajh nahi aaya .. science student hu
This is based on the purchase parady...... Why dosa ...wada pav can work.....😂😂😂
But the gist remains he same
He's dressed like mr. bean xD
Awesome
but if demonetization is done he cannot buy dosa and cannot deposit in Bank..
fekunomics makes you poor and hungry
Harvard nahi.. hard work..
Tam Bram rules the world bro.
Which Dosa shop reduces their price? Mr. Rajan, pls tell me. You miss that fact totally.. I agree TV price will reduce... Food and other essential items, no one reduces the price. Though raw material procurement price for making the Dosa is less, the restaurants just ends up making more profit. Even in the US, McDonalds did not reduce the price of burgers during the recession. So, though I agree with you on a lot of things and am an admirer, here you are way off.
He never said that the shopkeeper reduced the price. He said that at present the price is Rs. 50, and if the inflation was 10% then after one year the price will be 55 OR if the inflation of 5.5% then after one year the price will be 52.75.
btw, he himself clarified in another interview. According to some principle, it does not seem to work with Dosa because the "Technology of making a Dosa" is not keeping up in sync with rising prices to keep the price low. In industries like Cars and Computers it is clearly seen. So please Chill people :)
+Sheshagiri Pai
In reality when you used to buy Dosha from the pavement, the price was Rs 10; now you can only buy Dosha in a Mall where the price is Rs 600. What do you gain from the Wholesale price Index which is now low because of low crude oil price. Who cooks Dosha in crude oil?
+Sheshagiri Pai Guys please don't consider inflation as a static phenomenon.
Consider this example.
Current year - Year 1
Price of Dosa Rs 100 and inflation - 10%
Next fiscal year - Year 2
Now assuming the inflation remains same at 10% then the price of Dosa for year 2 will increase to Rs 110.
However, due to measures taken by RBI and govt, the inflation for this Year 2 was not 10% but rather it was reduced to 8%.
Therefore in Year 2, the price of Dosa will increase by Rs 8 and it will be Rs 108.
Thus, we can say that inflation has come down ( 10% to 8%).
However, in both the cases the price of Dosa will definitely increase.
+Dhruv Kapoor i never knew economics was so simple
invest in crypto..
and save the actual value you earned...
Now sell this dosa model to usa
Only what I find in this man and shashi tharoor is that only good english not any ground reality
He is from the south so is his coat
Even a fool understand these
I understand the concept of inflation but lets say for a pensioner who has 1 lakh FD in bank and gets an interest rate of suppose 8% and he utilises this 8K for his yearly expenses, so his principle will remain the same but since inflation is additive (compounded) to the cost of living that will only negatively affect a pensioner who is relying on FD interest. So fixed interest pension is not justified and must be adjusted for inflation for senior citizens.
Savings he karo bhaiya stock market to ram bharose hai...
Galat fahmi hai aapko.
India 70 saalo mein 50 billion USD GDP se
3 trillion usd GDP wala country ban gaya aapko lagta nahi hai ki long term mein stock market bhi grow karta hai?
Raghuraman rajan sorry behalf of people of india...bcos people can't understand this wonderful person nd given Indian economy to stupid person
All talk and no show.... That's Raghu for you. He had his chance-blew it and now wants his job back! lol
Raghu Ram Rajan should remember that he is a Central Banker and neither a politician nor a Nehru-Gandhi "Economist". Central Bankers should not be heard but be felt in the value of the rupee, the fiscal discipline of the Government and the integrity of the Banking system. Instead of taking time off from his work to lecture on inflation and dosas or wag a "tolerance" finger at the Prime Minister as part of the Obama-Sonia "parivar-that-loots-together-to-stay-together" chorus of Fifth Columnists, he should study M. H. De Kock and R. S. Sayers and learn to measure up to his job. Unless, of course, he is as erudition, integrity, culture and arithmetic challenged as India's Indian educated Judiciary, Bureaucracy, Police, Professors and other appointed and promoted on the basis of birth and Tehsildar's certificates. His instruments are OMO, BR, Audit, fines, and capping government over drafts. Not his mouth.
+Suchindranath Aiyer It is a new era, please let us learn from him !
+sijo joseph We have been in a new era for decades. That is why the value of the Indian Rupee has gone through the floor, Banks are festooned with "NPAs" (Bad Debts) and real inflation is going up.
+Suchindranath Aiyer sir correct me if i am wrong ---if indian currency reaches to say 75rs for 1 $ won't it be more profitable for exports earlier we got say 6800 for selling a product A now we get 7500 for selling the same product A.Though you might rebuttal me with imports.But is that not what the point is we should be self sufficient.Our main import product is oil.We can't obviously manufacture oil but can switch to other cheaper and cleaner fuels. We won't take holidays in france or Us we will take them in india itself.After all vacations in foreign countries is mostly for the rich they wont mind the 700x difference . This is what china is doing to kill our exports they have devalued their currency .
+taslish chadha also the bad debits thing is bad they need to put such willful defaulters behind the ba
+taslish chadha While Government corruption and profligacy continues to add to the deficit (inflation) and life styles are built on the corpses of the real (not constitutional) disadvantaged?
Bring an imported journo for showing snatch coat & wear permission
He talks all rubbish, off the track and impractical things, undemonstrative ones. It may all be working in California.