I have blogged about this before, rising petrol prices are good for the country.
What is not good for the country though, is the depreciating rupee, the rising CAD and all the problems that come with it.
Dr Manmohan Singh, in parliament recently said that ” we must control our appetite for gold and economise our use of fuel”.
Now what good is an economist prime minister if he can’t run the country’s finances without asking the people of the country to ” control their appetite for gold and economise their use of fuel”,
Think about it. We’re a large country blessed with a lot of resources. Unfortunately, we don’t have gold or oil reserves. Well not enough of either anyway.
So we need to import both. And we can only buy in dollars. When we don’t have enough dollars, we need to buy that first and then use that to buy gold and fuel and what not.
Now that’s the government’s problem. They must’ve screwed up in ways unimaginable to send an economy en route to 9-10% growth to spiral down to 4.5%. Yes? Definitely.
Why should that bother us? Primarily because onions cost 80Rs/Kg and restaurants now only give you one slice of an onion in your salad.
Now what can solve that? One of the multiple solutions, Increase the price of diesel. Ofcourse, that’ll make things worse because transporting onions will become more expensive and onions will cost even more and before you know it, you’ll be investing more in onions than in gold.
That’s why they subsidise diesel. So that transportation isn’t expensive. Now you tell me, why a bloke in a gas-guzzling, CO2 emitting, road blocking, noise making, 25lac SUV needs that subsidy. ( Useful to remember at this stage that the subsidy comes from taxes that you pay. Yes. Now get angry).
Selective subsidy isn’t easy to implement. But it’s probably worth giving it a shot. I’m not aware of the adverse consequences of such an act and I’d love to know.
Petrol is a luxury. So is diesel. But gold, is more than that. Gold is an investment. The fact that gold prices have risen sharply recently means that people who invested in it a few years ago, would’ve made a considerable amount of profit. It’s obvious that more people want to buy it. It won’t go up forever.
There are other avenues to invest money. Use them. Don’t buy gold for a year.
Does it ever anger you that the government is increasing fuel prices? THINK. It’s YOUR country. It runs using YOUR money. They buy crude oil using YOUR money. It’s a government not an MNC. Their revenue is YOU.
Not buying gold and paying more for fuel won’t solve this almost-crisis. But it’ll certainly help. This isn’t to say that government should wait for your help. They can do plenty that they haven’t done already. But what kind of sleepy democracy only wakes up ( partially) every 5 years only to vote and then sits back and hopes for the best?
Don’t vote for someone who claims he’ll bring petrol prices down. He won’t. Don’t boo someone who paints a realistic picture. Encourage them. Bite the bullet. Swallow the bitter pill.
I’m not an economist. I know nothing of economics. There are smart people in Delhi to handle that.