Inflation of 11.05% could have been controlled/avoided?..

India
June 21, 2008 4:35am CST
Important: I analyze this from the Indian economy angle..to try and expose how the government acts in a lackluster state. The country may differ.. but the it is the clear failure of the strategies of the ruling heads. This high percentage of inflation around 11.05% in my country Could have been easily avoided.. Prior to the year 1991, " There was a fund called oil pool deficit fund. Every year, during budget allocation a certain sum of money would be allocated to act as buffer.. in situations like this. But subsequent governments stopped funding for it, and the worst case is they utilised the funds in oil pool fund for other purposes.. The Government of India, imports only 70% oil, and the remaining 30% of oil is produced in India itself.. In case of price hike in the world markets.. the government should hike price for that portion of the Oil that is Imported.. But its not the case.. It hikes the price of the remaining 30% of oil produced here in India also. So, the oil companies really get profited.. For example.. one liter of petrol before price hike is Rs 50/- Now due to the oil price hike in world markets.. one litre petrol is increased say by Rs 10 means.... this Rs 10/-is not for the 70% oil that is being imported, but also includes for the 30% of production done in our country. What is the need to hike the price of oil that is produced here. And to strike the last nail on the coffin, the oil companies profit for an year is estimated to be around 500,000 millions of Rupees.. Can't they sacrifice a bit for the prosperity of the nation. This means that price hike on essential commodities is manipulated. Okay.. I leave it here friends. Lets us share our experience with respect to the respective governments..
1 response
@ssh123 (31100)
• India
21 Jun 08
Economic forces like supply, demand, inflation, down fall of prices do not act according to the theoretical views of economics. There are empteen number of forces interacting in the market to determine the price levels, not mere supply and demand and a given price level. Therefore, however brilliant a finance minister one is, one cannot take up appropriate steps to control the inflation. The present day inflation in India can be attributed to several factors: 1. The role of black money and rise of its ugly head -- too much money is chasing too few goods. 2. The continuous rise in prices of petroleum products which definitely have alround impact on prices of all goods and services 3. The overall inefficiency in implementation of monetary policies. I have llsted a few and tere are many which contributes directly or indirectly towards inflation.
• India
21 Jun 08
Yea.. i agree that there are other factors that are involved.. but.. it is the spiraling oil prices having a major impact on the Inflation.. It is estimated that oil price hike contribute to 24% of present inflation now. And this could have been avoided, had their been the oil pool fund as earlier. What is the need for a new government to scrap the old scheme, if it is going to benefit the country as a whole?
@ssh123 (31100)
• India
21 Jun 08
You and me know how oil prices are arrived at. The present oil price has more of excise duty, central sales tax, each state having its own rates of taxation. Inflation was ramphant before the hike in oil prices and the FM was doing jugglery earlier also. Fuel price increase only added fuel to the price. Under the circumstances the government could have avoided increase in oil prices for the time being when other forces are playing their part to put inflation at high. in otherwords the government this time could have absolved the price of petrol.
• India
21 Jun 08
Inflation was rampant before the hike in oil prices and the FM was doing jugglery earlier also Well said my friend.. this is what i mean.. FM and the heads of the government are making a mockery of us. Every friday they declare the inflation..worked out on the indices they have.. never bother about the indices involved. (.This indices dictate the stock market, in a great way.) And now the revise the inflation of the previous months, i mean that of April,May and the first week of June. Now friend, will not this instill the minds of common man like me, what made them to declare the wrong inflation rates( at a reduced rate) in earlier months and now revising it to higher rates? The indices used in earlier months for arriving the inflation is still the same now. No changes effected in it. Does this mean they can't do the simple arthemetics involved in arrving the figures of inflation? It is mind boggling friend to see politicians, of this sort.. utterly creating confusion in the country for the sake of filling their coffers. And thank you friend for giving a good interaction.