I’d say Narendra Modi is one lucky bugger. Just because Obama wanted to cock a snook at Putin’s oligarchy in Russia, crude prices are flirting with the $60 level mark. Which is like a good 40% lower when he took office. Much as I don’t like this country’s dependance on non-renewable energy sources, specifically crude, here’s why I want to vouch for his decision to not fiddle with the petrol/diesel prices by a large margin.
1) See that current account deficit figure there? We need to reign that in.
2) Gadkari says he wants to increase excise rather than give away cheap fuel and use that to build roads. Sweet.
4) If he makes it free market pricing and you get used to cheap fuel, imagine how tough its going to be bringing it back up. *looks towards the communists in Bengal*
And lets not forget the cascading effects on inflation, monetary policy and bank interest rates. Raghuram Rajan is right in not obliging Latha Venkatesh with a rate cut.
5) The erstwhile bleeding PSU’s like IOC, BPCL, HPCL (and as a result of the complex fuel subsidy sharing policy, ONGC too) are finally making some monies. Which goes where? Yep.
We’ve had six decades full of decadent socialistic policies which assume that global trade happens in a bubble. Time to let this country make hay while the sun shines.