Thursday, November 20, 2008

Indian Govt. Needs to be more Responsible

Indian Govt. have decided to keep the high petroleum prices intact and not bring down after the price of Petroleum has come down from $170 per barrel to $50 per barrel.

The reasons:
1. Govt. had to fight a lot to increase the price and they fear if they can hike in future if they bring down now.
2. Decrease in price could swell the demand, and as India is a net importer it will harm its trade and fiscal balance.
3. The Oil Companies have been harmed when the international prices were high, and now is the time for them to recover the loses.
4. Reliance is coming up with its KG Basin and is going to reduce huge external dependency. But along with that it is also speculated that Reliance is lobbying govt. for not cutting retail prices. all to the benefit of the firm.

Govt. is fighting with Inflation and low economic growth pressure, and they are trying to influence Industries not to fire more people so that unemployment does not shoot up. Economist PM understands the Economics and Financial system much better than I do. But it is really surprising to see him choosing not to lower energy prices to shoot demand and go for bleeding the already failing companies.
He is also using Financial measures like reducing CRR and Interest Rates to fight the crisis. This is increasing money supply in the market but this can hardly solve the industry problems. The crisis is global and it has come to India with the reduction of Global demand for Indian products. This has coupled with insufficient fund for companies to expand in India.

PM rightly took the second cause. But if the first does not bounce back and if there is no demand in the grass root level, the increased money supply may just end up rising inflation and lowering currency value. He might need to learn from Zimbabwe and Japan. Japan's use of these instruments in 1995 Asian crisis didn't do any good. And Zimbabwe's current Financial collapse is horrible.

PM Manmohan Singh has taken Indian and Developing Nations issues to G20 Summit. He has criticized WB, IMF and the developed nations for not doing enough to tackle the crisis and putting false blame in developing nations while they are just the victims of the crisis. He is probably correct and it seems India is really getting ready for taking some responsibility in the International Governance.
But does India want greater role in the International Area at the time when Most of the Asian Economies (Including India) grows on American Consumerism? Has time not come yet for India to push itself for increased consumerism and uplift the social/economic status of the general people?

Indian Govt. and India Inc may seriously need to review this. Blame game hardly helps.

No comments:

Page Views from May 2007


© New Blogger Templates | Webtalks