The Building of the Indian Nation

  Part II of my Book




One of the most reliable sources of Ancient History and in particular Indian history is provided by the writings of foreign travellers and chroniclers. Most of their writings, in context to India in drafting the current History have been left by historians as, exaggerations or full of lies. The place of honour is secured by Herodotus (454-425 BC), who was called “the father of history”. He knew of Indians as the eastern most and the most numerous of the people inhabiting the empire of the Persian emperor, Darius I. They paid him the huge annual tributes of three hundred and sixty talents gold dust, he also knew Indians outside Persian Empire. He was also found unreliable in some respect, and his accounts of gold digging ants to the size of dogs in India were the most talked about. His total writing and accounts are also not taken into account as been seen as been led away from truth. Ktesias (416-398 BC) a physician in the court of the Persian emperor, had every opportunity to know the facts about India but his accounts were also left as full of lies and exaggeration. The accounts of other dependable writers as Nearchus the Alexander’s Admiral, who wrote a dependable account of the voyage from the Indus to the Persian, the original of which is no longer available, but the extracts, have been preserved for posterity in Arrian’s Indica. Onesicritus the master pilot of Nearchus, his account of Alexander campaigns, also does not exists in its’ original form, and was found highly exaggerated. Aristobulus another companion of Alexander who was also a good geographer, and Kleitarchus another Alexander companion were all left alone as unreliable or full of exaggeration.

The Himalayas constitute a formidable crescent shaped barrier separating Sinkiang and Tibet from India along its wide northern frontier and containing the highest mountain peaks in the world. Himalayan the highest mountain-system in the world extends practically uninterrupted for a distance of over 2500 Kms and covers an Area of about 500,000 sq. Kms. The Himalayan range includes Everest and some ten peaks rising above 7,500 meters. They are framed in immemorial legend, and Hindu literature as the abode of Gods and Sages, the home of Parwati- the throne of her consort (Mount Kailash) adjoining one of the holiest tirthas (religious place of worship), Lake Mansarovar, and the source of innumerable life giving rivers of India including the river Ganga, the holiest of them all. 

The passes across the Himalayas are few, very elevated, and precarious, and all of them strike into the elevated tableland of Tibet, also known as the “roof of the World.” The outer range of the Siwaliks, a more recent formation of broken and disintegrated hills that form a barrier the first step upwards to the planes. The Himalayas are continued by the Hindu Kush, and its offshoots in the west and the Lushai hills on the east, provide the rugged, elevated and formidable barrier in the north separating it from the rest of the world.  Below the Hind Kush stretch of narrow irregular border districts of Pathan Highlands, a country all mountainous, a land full of wild tribes, and the chief passes between Afghanistan and India. This formidable natural fortification and barrier made it extremely difficult for Alexander companion to travel and traveller’s to enter the heartland of Ancient Bharat, i.e. India
 The two mighty rivers, the Sindhu in the north-west and Brahmaputra in the east, garland the Himalayas at either end of their length of over 2500 Kms. The Brahmaputra and its confluent, with their potentialities for the cultivation of Tea, coffee and fruits, dominate the northern eastern frontier, where live the numerous sub-Himalayan tribes.
 The North- west is the key to India proper and too much of her history. It is continuous on the south with the vast plain of Hindustan, the Aryavarta (i.e. the home of Aryans) of Manu (the first man as per Hindu mythology).  In Kashmir are contained the great reservoir’s of water supply that irrigates the flat plains of Punjab. Kashmir was from earlier times an influential centre of Hindu culture, was the home of Sanskrit scholars and poets.

Bharat, i.e. India is bounded on the Southwest by Arabian Sea and on the south east by the Bay of Bengal. On the north, north-east and north-west lie the Himalayan Ranges. The Indian Ocean washes the southern tip, Kanayakumari. Arawalli range in the north- western India is one of the oldest mountain systems of the world. The present Aravalli range is only a remnant of the gigantic system that existed in the prehistoric times with several of its summits rising above the snow line. Patkai and allied mountain range run along the Indo-Bangladesh-Burma border and may collectively be called Purvanchal or eastern mountains. The entire major landforms, hills, mountains, and land surface has developed into plateau character, with a large portion of land falling in this category. There are extensive plains either flat or rolling at levels ranging from 300 to 900 meters, dotted with conical or rounded hills or traversed by flat-topped ridges.   
There are over 60 languages spoken in India and an equal amount of culture, tribes, races and society in existence. How such a large portion of population existed only in India and not in any other part of the world, is a matter of mystery, and if we believe in the current History, it becomes more confusing and illogical. It is an accepted fact that the Hindu cultures, religion and civilisation is the oldest and has influenced most parts of Asia. It is also an accepted fact that the trace of human life is oldest in Asia. As per the writing, India was a land of riches, which attracted the people throughout the world. The fact is that the approach of Indian sub-continent was the most difficult, and hence beyond reach for most people and races. The Indian climate is also humid and hot, and not conducive for work and health. Considering other parts of Asia and the large area of plain grass lands, water sources and minerals found in other parts of Asia, it becomes more illogical for so many races of primitive man, to cross all the difficult barriers and come into India. It is also beyond explanations, why different races of primitive man did not explore and settle into the abundant vast plain lands of Europe and Central Asia. Moreover as per geographical excavations the rich plains of Ganges were low lying fertile land which were prone to floods and water logging and made life difficult. Several cities and cultures and cities therein were washed out due to heavy flow of water from Himalayas, as is revealed by historians.

The word Aryan or Arya in Sanskrit means persons “of good family”. The Gazetteer of India an amended version of the Imperial Gazetteer of India (published by Britishers) states that Airyan in Zend language also means the same. I do not have any knowledge of this language hence am not in a position to comment on it.  Civilisation and classes of people have named themselves in their own language. I do not find anywhere in the History the trace of spreading of the ancient Zend language and culture throughout the world, and its further development as a role in civilisation or culture of any region, in any significant way as compared to Sanskrit or Hindu culture.

  A close study of all-old civilisations and culture from pre-historic times reveals that culture, socio-political organisation, prosper, grow and spread from the region of their origin i.e. the mother land. There is no evidence or precedence in the history except that of “Aryans”, wherein a cult of people came from other region, settled in a far away land in another part of the world, made it as their homeland and then developed the worlds richest culture. It is also surprising how historians believed that the ancient Aryans, who developed the Sanskrit language much later as printed in History, named their race as Aryan in Sanskrit thereafter. The first culturally rich and prosperous civilisation that spread through out Asian peninsula and also Central Asia was that of the Hindu culture and civilisation.
There is no evidence or inscription anywhere in the history, which proves that our ancestors moved from Central Asia to India, which was named by the Aryans as Bharat as printed in History and our mythology.

The Ancient Bharat, which included Afghanistan and Pakistan, is known and referred in the Hindu Granths as Deva Bhumi (i.e. the land of Gods). The mythologies also reveal the special affinity of Deva’s to this Holy Land of Bharat.  The Mythologies and its script also state a healthy relationship between the Asuras (Demons) and the Deva (God), and marriage’s between them. Various Indian mythologies also state how Hindu women’s gave birth to Deva’s children.  It is further mentioned that at the time of writing of Veda only Deva and Asuras existed.  It further goes to state, that their were long battles’ between Asuras and Deva’s, and that both of them worshipped the Mahadevas, i.e. the Devas, Deva (God). These give our theory further strength, that Devas were not gods, but godly people of their time, which worshiped Mahadevas and Aadi Shakti, Maa.

            History states the existences of various tribes in and around the elevated tableland of Tibet, commonly known as the “roof of the World”, and the trace of oldest civilisation in the adjacent plains of Himalayas. In prominence the Mongolian tribes situated on the North-eastern and western side of Himalayas. It is also relevant to mention herewith that these ancient civilisations had many things in common. The Chinese, people believed and studied Astronomy and astrology, made calendar and followed it as per lunar cycles, loved and treated their King as a son of God, like Hindu’s as mentioned in Veda. Indian kings also represented themselves as the representative of the Hindu God Vishnu and performed their Raja Dharma as per the Hindu religions and followings. Nepal the only Hindu Ratra (nation), still treat their King as a son of Vishnu, the Hindu god who is known as the palankarta (the one which looks after every day needs).    It is also relevant to mention here-in that, the Chinese and the Indian knew about the metals, compounds and it chemistry most and applied it in modern use and it is from this part of the world that this knowledge was carried though out the world. If we study the Ancient culture of China and India we find many things in common, including the first to make cloths, silk cloths and fine printings and its dyes. History reveals that all these races were later influenced by Hindu religion and Hinduism the way of life, and worshipped Hindu Gods or Saints (Buddha).

The excavation at Harappa and Mohenjodaro in Indus valley point to a well developed knowledge of metallurgy of copper and bronze in about 2500 B.C. Indian steel was highly valued all over the ancient world and was exported in large quantities. A Chinese traveller has written about the Brahmin possessing a liquid (probably acid) capable of dissolving most substances.

 Our ancestors named their race as Aryans, “meaning thereby a good family”. The legendary Uttarakurus of the far north were a model of Arcadian society of godly men who were the first Vis’ i.e. tribes of Aryans. It is perhaps from this Vis, from where some the early Aryans started their exploration of Asia and their journey to Central Asia and beyond. The love and preference of living in the cold icy atmosphere of Himalayas by Devas, is reflected by the spread of Aryans to find cold places, further North and North West from India, into Europe and Central, North and North East Asia. The finding of the Swastik symbol and other Aryans signs, culture and society in these parts, all gives an impression of the primitive Aryans and Devas, adaptation to the cold atmosphere and also an impression that Aryans were a race which was near to the Deva race, in matter of physical features, habits and structure, hence were called a good family.  It further gives an impression that our Ancestors used various methods of reproduction in a bid to find a better race, or family and left others as separate tribes to develop and live their own life, with support and help from them. Each tribe in the beginning had its own culture way of living and worship. Each tribe worshipped its own Deva. There is a tradition in the Hindu culture to worship our ancestors and the same is followed as of today. However as per Hindu mythology, the riches of knowledge were shared more with the Aryans than with other tribes.

In some passages (Sloakes) of Rig Veda, the Mahabharat and the Pali canon there are references to a casteless millennium of equality, plenty and piety- this was supposed to have existed in some remote, unrecorded antiquity.

In the golden age of Krta or StayaYuga there was only one caste of Deva (gods) or Brahman. The concept of Vis or tribe came late, and the early tribal fathers (prajapati) were known by their mothers’ name viz., Aditi, Diti, Danu, Kadru, Vinata etc, as per Rg-Veda and the first canto of Mahabharat. These original mothers were supposed to be the sources of mankind. There were different Vis situated in different parts of India, mostly in the plain situated near the great Himalayas and all were matriarchal. The one-caste society of the Krta age is mythised version of tribal herd bound by ties of kinship and tribal discipline. Men were governed by tribal rules of hunting and war. How and when the mother was set aside and the patriarchal system replaced the matriarchal is not known, and later on the conception and legacy of ‘Sakti’ or the Cosmic mother, was born. We the Hindus still pay the highest respect to ‘Sakti’ and our mother and worship goddess in its various avatars. Mother’s place is considered the most auspicious place in Hindu society, we worship the same and name it by various names and one such name is Janani (the provider of life). When the Vis and Janas become accustomed to the environment and the human evolution was complete, the Aryans with the help of Devas began to unify them and bind them into one homogenous group

The Building of The Indian Nation

   Part  I of my Book 


The foundation stone of the Indian nation was laid down from times unknown, way back in past millennium. The beginning of the nationalist movement in Bharat i.e. India would be incomplete if we do not evaluate and study the Indian people, their classes, race, varied culture and religion. Indian civilisation is one of the oldest in the world. An evaluation and analytical study of Hindu mythology and writings reveals and produces it as the oldest. Hence it becomes essential and desirable to bring forward a comparative study, of the facts and findings which has resulted in the writing of the history by the historians, vis-à-vis our Holy scripts, granths and other factors essential and desirable for proper understanding of the current history. There are several contradictory facts and discrepancy, due to the illogical conclusion drawn in printing the History which is described hereunder, and which has lead me to believe of the factual untrustworthy character of our ancient history. This History is written and composed by European historians, who themselves do not claim to possess an ancient civilisation and history like ours. I am producing both these views for logical evaluation and appraisal of the subject. The analysis includes the study of the golden era of Indian economy, and the reasons and methods instrumental in building the Indian economy to be called as “Sonay Ki Chiriyaa”.

The origin of the people and its races in India are not clear, as of the origin of Man (Homo Sapiens). Our ancestors inherited a multiple and confusing race of culture and language of people.  Civic society or organised socio-political civilisation first took shape
within a narrow geographical compass that covered Egypt in the West, Indus valley in the East, Anatolia (Asia Minor) in the north, and Sumeria (Iraq & Iran) in the West.
  
Civilisation radiated outwards from these centres, reaching the Mediterranean Sea board and the islands in the West. The first cities were very small affairs centred around the temples. Very soon some temples became more prominent and the high priests of these temples became the first city chiefs. Very soon some temples became more prominent and the high priests of these temples become the first states. Among the earliest of these states found and excavated were those of Indus valley, Sumeria and Egypt. The Indus valley Civilisation is the last of the great civilisations to be discovered. Though a late–corner to the history books, the Indus civilisation is the oldest of the great civilisation known. Recent research in Mehrgarh and other sites in the Indus valley, through carbon-14 samples analysis has shown that the structure were of a period ranging from 6000 B.C to 7000 BC.  Earlier structure must therefore belong to a period beyond prior to these dates.

The racial origin of the Egyptian is also a matter of dispute. Some regard them as a conquering Asian race acquainted with metallurgy and armed with superior weapons, who easily triumphed over the tribes inhabiting in the Nile Valley in Neolithic times.  Sumeria was in the lower valley of the Euphrates and Tigris, in the southern half of Mesopotamia. We do not know who the Sumerians were, and are compared by some to Turanians of today and others to the Dravidian’s of India.

The influence of Hindu culture and civilisation in their way of life was found in all these ancient civilisations, which includes the building of temples and priests. The trace of Hindu influence and its gods are mentioned in history. There are further traces of mention of Hindu Gods and dietaries, in the treaties of that period. It is also evident that there was interaction between these civilisations from times unknown. The river Indus, is called by Aryans as Sindhu, has lent its name to India. Its valleys on both sides have been the seat of a civilisation that was not only older but also superior in many respects to the fabled civilisation of Sumeria and Egypt. This historic river has five major tributaries- rises from Mount Kailash in Tibet (known as the Holy mountain of lord Shiva as per Hindu Mythology), and traverses many miles through the Himalayas, thereby crossing Kashmir and Punjab (land of five rivers) and Sindh before falling into the Arabian Sea.
Archaeological excavation and research has shown that, a species known as Ramapithecus was found in the Siwalik foothill of the North- western Himalayas. This species believed to be the first in the line of hominids (human life) lived some 14 million years ago. Recent research has shown that a species resembling the Australopithecus lived in India some 2 million years ago. Little research is done in this matter and leaves an evolution Gap of 12 million years since Ramapithecus. Geographically the Indian sub-continent was a separate Island from the main land Asia, some 50 million years ago.  The continent drifted and joined into the main Asia continent later on and as per these writing it appears that our civilisation was much older than claimed and perhaps the oldest and the most advanced in the world.

The Himalayan range being artificial mountain, essentially not made from volcanic eruptions of Volcano’s, but made from the crust of the drifting of the Indian/Jumbo Deep peninsula to the main land Asia more than 50 million years ago. If we study our rich Sanskrit Granths, slogans, scripts and followings, we find the Indian continent was called Jumbo deep (meaning thereby big island), Bharat Knanday (Indian part), by the writers, sages and Brahmins. In the traditional and legendary cosmography of the Hindus, it is part of Bharat- Varsa to the south of Meru (Golden Mountain).

History states that in 6000 B.C there were two great civilisations, the Neolithic settlements of Mehrgarh, Baluchistan and the Indus valley. That is the period that the first civilisation and city life was discovered, which included domestication of cattle, water buffalo, sheep and goats. Century 5000 BC is said to be the period in which Indus valley civilisation developed farming of wheat, cotton and barley, fruit trees pottery, beads and jujube and also date was discovered. 4000 BC is marked in the history as the invention of pottery wheels and bow drill in the Indus valley, klinfired pottery, red painted wares, beads of local stones and copper melting.

History and the gazetteer of India states that some time in the 2nd millennium BC a new race generally called Aryans or Indo-Aryans entered India. Before that period the Indus valley civilisation developed and flourished in an Area now known as Pakistan, Afghanistan and Baluchistan. In the 2nd millennium B.C, they started moving from their original homeland and migrated westwards, southwards and eastwards. The branch, which went to Europe, were the ancestors of Greeks, Romans, Celts and Teutons. Another branch went to Anatolia. The great empire of the Hittites grew up from the mixture of these people with the original inhabitants. Those who moved southwards came into conflict with the west Asian civilisation.

The Kassites, who conquered Babylon, belong to this stock. In the excavation at Boghaz-Koi in Asia Minor, which date about 1400 BC inscriptions are found containing the names of Deities like Indra, Varuna and Nasatya. These gods are also mentioned in Rig- Veda. To the same period as Boghaz-Koi, belong the clay tablets with cuneiform script discovered at Tell el –Amara in Egypt where references are found of prices of Mitanni in Northwest Mesopotamia, bearing Indo-Aryan names. There is no evidence or inscription anywhere in the history, which proves the movement of Aryans from Central Asia to India which, was named as Bharat or Hindustan by our ancestors.

Sumeria one of the oldest civilisations has close similarities in the field of religion and mythology of India.  Indian philosophy and religion made a deep impression on the Iranians. Indian culture influenced Iran and their relations with Indians, which as per Historian are, traced back to third millennium BC. The medieval period saw Capliphs encourage the translation into Persian of Indian treaties on medicine and astronomy. Arabs borrowed the Hindu system of numerals (i.e. the number system) from India and they spread it all over the world. The Puranas (the Indian History of old narratives) mentions about Samba (a son of Krishna) who is stated to have brought the Maga (Indian form of Magi, the sun- worshipping priest of Iran) into India. These East Iranian (Sakadvip) were brought in India into early centuries of Christian era, and were/ are known as Sakaldvipi Brahmin’s in India. Various other literary and archaeological data bears evidence in this regard. These Brahmin’s have been integrated in the Indian Society and settled as far as Bihar and one of them happens to be my priest. The Chatta Puja of Bihar is probably one of the Indicators of a strong cult of Sun- Worshipers in Bihar, brought by these Brahmins.  The Indus valley civilisation(also Known as Harrapa and Mohanjodaro Civilisation) is continued and extended with proto-Hararappan Civilisation and culture in Sindh, Punjab and Rajasthan. Among those excavated and studies by archaeologist the KaliBhanga and Armi Culture assumes significant importance. Kali Bhanga in Rajasthan is situated on Ancient Saraswati, now called Ghaggar. Potteries made of six fabrics, all wheel made were found by excavators and these fabrics and form show a close affinity with the Iranian and Baluchistan pottery. Among the excavated samples, Carbon –14 sample of a pottery in Kali -bhanga dates as to 2245  +/- 115 B.C. The author of the excavation thought it to be superior to Harrapa objects. Amri culture Potteries Carbon sample dates it to a date before 2,500 B.C. Indian mythology at various place mentions Sumeria and its culture.

Imperialism was the dominating factor in the Indian politics before the end of Vedic age (as defined by historians), and it was symbolised by the time honoured Ashvamedha sacrifice. The Aitereya Brahamana mentions no less than twelve Kings who “went everywhere, conquering the earth, upto its ends, and sacrificed the sacrificial horse.” Three of them, as well as several other Kings, are stated in the Satapatha Brahamana to have performed Ashvamedha sacrifices. The Puranas reckons Parikshit (the grand son of Pandavas brother Arjun) as the founder of a new dynasty, the Paurava, and give a list of thirty kings belonging to it. Parikshit and his son and the successor Janamejaya loom large in Mahabharat, and the latter is mentioned in the Aitareya Brahamana as one of the twelve universal sovereigns. The great Bharat war according to the Mahabharat was fought with a view to bringing the whole of India under one political authority, and this was successfully accomplished by the decisive victory of Pandavas. But this political unity did not last long.

The Indian culture, religion, education, spread and influenced almost every corner of eastern Asia, which includes China, Thailand, Malaya, Burma, Indonesia, Java & Sumatra, Japan etc. as mentioned in history. Indian cultural influence extended to west and Central Asia as well. There was no attempt at political expansion in the west; this cultural expansion was so much that it extended further. There was an Indian Kingdom in Khotan alleged to have been founded by a son of emperor Ashoka. Buddhism was introduced in that kingdom more than a century after its establishment. Both Sanskrit and Prakrt were studied in Khotan. The whole of central Asia was a meeting place different culture and it was a silk route between Rome and China.
 Chinese Turkestan named and called by Sir Aurel Stein as the innermost heart of Asia, and the remains in Turkestan finds at different sites explored or excavated by archaeologists have established beyond doubt that a large number of Indians had migrated from Punjab and Kashmir and settled in the Tarim basin where they built numerous cities. Indian thought were so firmly planted that when Sir Stein was exploring that region he felt as if he was in some Punjab, village although he was 3,220m Kms away from the land.

 History prints the oldest civilisation existed in Indus valley before 6000 BC, and the Dravidian’s built this highly civilised big town. The Aryans that were a pastoral race might have come to India some 2000 years ago. Though it is not exactly known what happened to the Indus people or their civilisation, it may be assumed that they intermingled with the incoming Aryans who adopted the Indian culture on their own. The Dravidian’s were Shaviks, the Idol worshipers of the Lord Shiva, and were perhaps the builders of city civilisation of the Indus valley, the remains of which are found at Mohenjo-daro and Harrapa and other Indus cities. If we look at the great Eliphata Caves found in the coastal island of Mumbai, the large big old statues, there tells the story that the Dravidian culture existed and flourished in India much before the Aryan culture. This is what the historian and Archaeologists say about the Indus valley civilisation.
 Excavation at Sangan Kalla, Mysore and at several places in India, have yielded evidence to show that in this region, microliths are of considerable antiquity, positively before the Neolithic or polished Axe Culture or the beginning of Agriculture, as dated and described by the Historians.

It is strange reality, that the European Historians (who do not have or challenge the antiquity of their History) have written the Indian History, and in doing so, have totally ignored the Indian writings and date chronology, to the extent that they have also dated the composition of Veda at around 1500 BC and 900 BC as the age of Mahabharat. In doing so they have rejected most of the writing of their own renowned Historians.
The Englishmen in their context of writing history have omitted valuable findings which did not suit their long-term strategic interest in India and have deliberately drafted the history which is most conflicting and damaging. In their bid to write history the Englishmen made Archaeology, Epigraphy, geography, culture religion and science as their source of writings. They have wrongly, deliberately named and accepted certain dates being the date of the writing of our Holy Granths and knowingly left some Granths as being the writings’ of Epic age. Most of the source of writing which conflicted their version of History was not considered and left out as unreliable and now desires a second look in the current world context.



On Inflation its Causes and suggestions


I had  stated in my earlier report   that India’s has one of the largest  arable land  which is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. India ranks second worldwide in farm output.  Agriculture and allied sectors like forestry, logging and fishing accounted for 15.7% of the GDP in 2009–10, employed 52.1% of the total workforce, and despite a steady decline of its share in the GDP, is still the largest economic sector and a significant piece of the overall socio-economic development of India. But when it comes to agriculture, its output lags far behind potential.
There can be no Green Revolution without adequate irrigation and fertilizer, which is consistently deteriorating due to the faulty policies of the Government. The Current Budget has given nothing to the Agriculture and there is little emphasis in this direction. In fact the fertilizer subsidy for the year 2011-12 has been pegged down (at Rs. 49,998 crores), which is lower than the revised estimates for 2010-011 (Rs. 54,976 Crores).
 The same is here reflected in the RBI report.

  Man Mohan Singh is following the Expenditure method of progress and hence pumping a lot of money in the Indian Economy by way of Deficit financing which is revealed hereby by RBI report. I am hereby elaborating the GDP calculation data for ready reference:-
GDP can be determined in three ways, all of which should, in principle, give the same result. They are the product (or output) approach, the income approach, and the expenditure approach.
The most direct of the three is the product approach, which sums the outputs of every class of enterprise to arrive at the total. The expenditure approach works on the principle that all of the product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers," colloquially) must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes.
Example: the expenditure method:
GDP = private consumption + gross investment + government spending + (exports − imports), or

Note: "Gross" means that GDP measures production regardless of the various uses to which that production can be put. Production can be used for immediate consumption, for investment in new fixed assets or inventories, or for replacing depreciated fixed assets. "Domestic" means that GDP measures production that takes place within the country's borders. In the expenditure-method equation given above, the exports-minus-imports term is necessary in order to null out expenditures on things not produced in the country (imports) and add in things produced but not sold in the country (exports).
Economists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector (or government) spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are:
•           Private consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption.
•           If separated from endogenous private consumption, government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework.


RESERVE BANK OF INDIA
First Quarter Review of Monetary Policy 2011-12

17. Inflation continues to be the dominant macroeconomic concern. The headline WPI inflation rate was 9.7 per cent in April 2011. The provisional inflation figure was 9.1 per cent in May 2011 and 9.4 per cent in June. Given the recent pattern, these numbers these numbers are likely to be revised upwards. Thus, the headline WPI inflation rate for Q1 of
2011-12 remained stubbornly close to double digits and inflationary pressures continued to remain broad-based. Both the level and the persistence of WPI inflation are a cause for concern.
25. The Reserve Bank’s estimates show that the total flow of financial resources from banks, domestic  non-bank and external sources to the commercial sector during Q1 of 2011-12 was lower at ` 2,40,000 crore as compared with ` 2,63,000 crore during the corresponding period of last year.


30. During April-May 2011, the Central Government’s revenue deficit and fiscal deficit turned out to be higher than the levels during the corresponding period of the previous year reflecting lower revenue receipts and higher expenditure. Up to July 18, 2011, the Central Government completed 34 per cent of its budgeted net market borrowing programme, as compared with 37 per cent in the corresponding period of last year.

38. It is important to recognise that in the absence of appropriate actions for addressing supply bottlenecks, especially in food and infrastructure, questions about the ability of the economy to sustain the current growth rate without significant inflationary pressures come to the fore. The economy's ability to grow rapidly for any length of time without provoking inflation is dependent on implementing policies, with corresponding resource allocations, which will allow the supply of various products and services to keep pace with demand.
40. First, prices of petroleum products such as petrol, diesel, kerosene and LPG were raised in May/June 2011. The increase in administered petroleum product prices in June 2011 will add about 70 basis points to WPI inflation as a direct impact. In addition, there will be an indirect impact which will play out during the course of the year. There will be further upward pressure on inflation due to another one-off factor. The sharp upward revision in domestic crude prices under the minerals category, with a weight of 0.9 per cent in WPI, added about 40 bps to WPI inflation in April 2011. A similar impact may be
felt in March 2012 unless crude prices moderate significantly.

41. Second, minimum support prices (MSPs) for some agricultural commodities, particularly rice and pulses, were increased significantly. This is likely to exert upward pressure on food inflation even if the harvest is good.
42. Third, non-food manufacturing inflation persists at elevated levels, reflecting underlying demand pressures. While early corporate results for Q1 of 2011-12 indicate some moderation in margins, suggesting reduced pricing power, the pass-through of higher commodity prices into more generalized inflation remains significant.

43. Going forward, the inflation outlook will be shaped by the following factors. First, it will depend on the overall performance of the south-west monsoon. Even if there is no major deficiency at the aggregate level, an appropriate spatial and temporal distribution of rainfall during the whole season is crucial. As price pressures in respect of protein-rich
items persist, any shortfall in rainfall or its pattern could pose significant risks to food inflation.

47. Keeping in view the domestic demand-supply balance, the global trends in commodity prices and the likely demand scenario, the baseline projection for WPI            inflation for March 2012 is revised upward from 6.0 per cent with an upside bias, as indicated in the May 3 Policy Statement, to 7.0 per cent (Chart 2). As indicated in the May 3 Policy Statement, inflation is expected to remain at an elevated level for a few more months, before moderating towards the later part of the year.


Risk Factor
51  (iv) The Central Government budgeted a fiscal deficit of 4.6 per cent of GDP for 2011-12. Subsequent developments have made the achievement of this target much more of a challenge. On the expenditure side, the subsidy burden will, in all likelihood, overshoot the budgeted amount in 2011-12 significantly, despite the recent revision in petroleum product prices. On the revenue side, while the tax cuts announced in June 2011, as part of the upward price adjustment of petroleum products, will primarily help in
bringing down the magnitude of under-recoveries of oil marketing companies (OMCs), the revenue loss to the Central Government from such tax cuts (about 0.3 per cent of DP) will impact both the fiscal and revenue deficits. The large fiscal deficit has been a key source of demand pressures. Fiscal consolidation is, therefore, critical to managing      inflation. While meeting quantitative targets, the Government also needs to focus on the quality of expenditure to sustain the fiscal consolidation process, which, in turn, will help contain aggregate demand and raise potential output.


CRISIL Research, India’s leading Rating, Research, Risk and policy Advisory Company reports  on RBI :- The Reserve Bank of India (RBI), in its first quarter review of monetary policy 2011-12, continued with its aggressive anti-inflationary stance. It raised the repo rate by a higher than-expected 50 basis points (bps) to 8.0 per cent. This is the eleventh successive increase in the policy rate since March 2010. Consequently, the reverse repo rate and marginal standing facility (MSF) rate have been revised up to 7.0 and 9.0 per cent, respectively. This rate increase, which came in the midst of slowing industrial growth, is a clear signal from the RBI that it remains committed to inflation control and is willing to accept a slowdown in economic growth in the short run. The central bank has also taken into account the elevated inflationary expectations in food prices, and its resultant effect on wages. In addition, domestic fuel prices have been only partly aligned to global crude oil prices, which have risen sharply over the last one year. However, despite this rate increase, inflation will continue to persist above the RBI’s comfort zone throughout 2011-12. The RBI has revised upwards its March 2012 WPI (Wholesale Price Index) inflation projection to 7 per cent from the earlier projection of 6 per cent with an upward bias.

GDP growth to moderate as cumulative interest rate hikes begin to impact
Industrial growth fell to 5.6 per cent in May 2011 from 8.5 per cent in the same month last  year, mainly due to poor performance of the manufacturing and mining sectors. IIP (Index of Industrial Production) data for April 2011 has been revised downward to 5.8 per cent from 6.3 per cent reported earlier. This indicates sluggish industrial growth in the economy. Capital goods also grew by a mere 5.9 per cent in May as compared to 7.3 per cent(revised downward from the earlier estimate of 14.5 per cent) in the previous month. With the capital goods’ growth slowing to 6.6 per cent in the first two months of 2011-12
compared to 25.6 per cent in the same period last year, investment activity in the economy has clearly slowed down. As a result, capital goods production is expected to remain sluggish in the coming months. However, while private consumption growth has
moderated since the third quarter of 2010-11, it remained robust at around 8 per cent in
the fourth quarter of 2010-11. Overall, GDP growth would moderate in 2011-12 to 7.7-8.0 per cent, assuming a normal monsoon, compared to 8.5 per cent in 2010-11. It is critical that demand side pressures are reigned in to control core inflation.

Inflation remains stubbornly above 9 per cent Inflation reached 9.4 per cent in June 2011 as compared to 9.1 per cent in May 2011. Also, inflation for April 2011 has been revised to 9.7 per cent from 8.7 per cent reported earlier. The push in inflation in June came from manufactured goods and food items. Overall, food inflation (primary and manufacturing) in June rose to 8.4 per cent as compared to 8.0 per cent in the previous month. Fuel inflation during the month rose to 12.8 per cent following an increase in petrol and diesel prices. Manufacturing inflation in June remained high, rising to 7.9 per cent from 7.7 per cent in the previous month. Core inflation (non-food manufacturing inflation) in June continued to be firm as well at 7.8 per cent, same as in the previous month, indicating firm demand. If consumption remains robust, an increase in the cost of production due to the fuel price rise will be passed on by producers to consumers thereby further raising manufacturing inflation. In this situation, the RBI will continue with its anti-inflationary stance.
In view of the elevated inflationary pressures, CRISIL Research has raised its average
WPI inflation forecast for 2011-12 by 50 bps to 8.0-8.5 per cent.