It’s never too late…

I don’t understand why this much needed bold step of petrol price rise is drawing howls of protest from every corner of this country?  I believe that had we taken this step a while back, we would not have been in this mess today.

Although this bad situation is fully sponsored by the UPA-2, it is a much needed step to curb the over-excited depreciating currency, which is swallowing industry’s growth prospects like a hungry shark.

We cannot ignore the fact that the burden which a common man has to face by this step would be irreparable, but in economics as they say… ‘All other things being constant’ only then the arms of economic prosperity works. The only way out is to keep trying different permutations and combinations of the available economic tools.

Let’s accept the fact that we are suffering because we made a choice, a choice of electing and believing the current government and nothing here is by chance.

The easiest question a common man like you, me or anyone can ask is… Why always petrol? Why not cigarette, diamonds, alcohol or any other tool altogether? That is because of the simple reason that India imports a major chunk of its oil requirements. On top of that we are obsessed with gold like anything. Clubbing together both these commodities constitute 42% of the total imports. These imports have to be paid for in Dollars which is actually creating a double whammy for India, in the sense that on the one hand, the fiscal and trade deficits are widening sharply and on the other the Indian Inc. is posting losses after losses.

I see four potential benefits arising out of this move.

1.) It will significantly reduce the mounting losses of oil PSU’s which will subsequently become the sources of profits for government. So the governments need not to borrow or print, which makes more money available for common man and companies at cheaper interest rates.

2.) Government does not need to set aside money for subsidies which it normally does, to compensate oil companies for their losses.

3.) It’s another positive  outcome would be a long due correction in Indian currency which will be very helpful to the corporate India.

4.) Last but not the least, I feel this steep rise in prices will prompt us to use petrol in a more judicious manner, which in turn later on could lead to a fall in the prices automatically, due to the fall in demand.

In the end, I contradict my above view by saying that…What is the guarantee that the revenues earned through above measures will not go to a politician’s bank account?

But Sadly Nothing in this life comes with a guarantee!

Contributed by Vijil Jain ( Class of 2013, IBS Hyderabad)

This entry was posted by Uncategorized . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *