Monday, December 17, 2012

How UPA's cash transfer will work

Story of Rural India post cash transfer scheme..

If among 10 people there are only 8 coconuts and each has Rs. 10/- to shell out, the first 8 people will get the 8 coconuts.. the last two rue being last in queue..

Then if u give Rs. 2 to each of them for free, the last two inform the coconut seller that they would have given him Rs. 11/- for the same coconut.

Next time coconut seller, increases the prices to Rs.11 to get more money for all 8 coconuts as he now knows he can make more money for same products. The first 8 people buy same coconut for Rs. 11/- Again this time, the new two left out people, tell him they would have given Rs. 12/- if he kept coconuts for them.

Next time again coconut seller, increases the prices to Rs. 12 to get more money for all 8 coconuts. The first 8 ppl who reach him, buy same coconut for Rs. 12/- 

The plantation owner who sells coconuts for Rs.7 to the seller, increases prices by Re. 1/- as seller is having more margin. Now coconut costs Rs. 8/- to the seller, he cant reduce the price now.

Farm labourer complains now coconuts cost more, so he wants increased salary. Plantation owner has to increase the selling price and cant reduce it to Rs. 7/- again now.

So more price rise, more inflation.

That's cash transfer scheme of UPA working for you..

What is lost is that prosperity meant, having more coconuts to suffice all, but that requires real solutions. 

This cash transfer is a solution through diverting the taxes paid, by the coconuts buyers & sellers & plantation owners & farm labourers, to the government to bring two more coconuts to suffice their needs.

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