GalaTime

• Morgan Stanley Global Economic Forum: Food Inflation Risks Rising Again
  

After remaining stable for a period of five months, the CRB foodstuff index has shot up again. The index has increased by 4.5% in the last six weeks, taking the pace of year-on-year rise to 23.7% as of December 2007. Global wheat, rice and soybean prices have increased to new highs.

Except edible oil for most other major agricultural items, India is largely self-sufficient, though it has again started importing wheat. However, healthy buffer stock and the government’s efforts to restrict exports have helped in keeping domestic food prices (especially of grains and pulses) insulated so far. Despite this, we believe that, with a lag, some amount of pass-through of higher international prices in domestic food prices would be inevitable.

• Ajay Shah: Combating fees and expenses in fund management

In some situations, Indian customers are incredibly price sensitive. But when it comes to fund management, customers seem to be willing to tolerate very high charges, and accept astonishing levels of non-transparency.

The distributors have a tremendous stranglehold on customers; there is a race to the bottom taking place where the mutual funds which squander the most customer money on the distributor gain market share.

One symptom of the idiocy of what is going on is the bias in favour of churning (customer switching from one scheme to another since the distributor earns a fee at every fresh investment) and the bias in favour of `new fund offerings’ at which point distributors make a killing.

Become a customer of the New Pension System, which is phenomenally low cost, when you get the opportunity.

Amen!

• Bloomberg: India’s Future May Depend on Eggs and Condoms

. . . the cost of reaching out to 80 million children and 10 million pregnant and breast-feeding women with daycare centers, medicines, counseling and nutrition — including eggs for a protein-rich diet — at 300 billion rupees ($7.6 billion) a year. That’s 1 1/2 months of taxes that the government collects from levies on personal incomes and corporate profits.

The fertility rate, which stands at 2.7 children per woman, is likely to miss the government’s target of 2.1 by 2010. And after India hits that rate, the population will still take another 35 years to stabilize.

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