oppn parties Trump-Induced Oil Price Rise Will Be Disastrous For The Indian Economy

News Snippets

  • Flipkart assures employees that there will be no job or salary cuts due to the COVID-19 pandemic
  • Although it was obvious, but the government still clarifies that there is no need to switch off appliances and only lights need to be switched off on April 5 at 9pm after confusion in the minds of some people
  • PM Modi and President Trump decide "to deploy full strength of (Indo-US) partnership" to fight against COVID-19
  • 17 states have reported 1023 cases of coronavirus linked to the Tablighi Jamaat, which translates to 30% of all positive cases in India
  • The government says people should not use alcohol-based hand sanitizers before lighting diyas or candles on April 5
  • The railways say there is no certainty yet when services will resume after the lockdown and a final decision will be taken in the next few days
  • As coronavirus cases multiply in Assam, six north-east states seal their borders with the state
  • Power System Operation Corporation Ltd. (POCOSO) putting all systems and protocols in place at war-footing to ensure there is no grid failure due to reduction in demand on April 5 at 9 pm
  • Power ministry scotches rumours that the power grid might fail due to the 9-minute blackout called by PM Modi on Sunday, April 5
  • Centre asks people to wear home-made masks if it is absolutely essential for them to step out of homes
  • Centre asks states to allow licensed street vendors to sell essential items
  • 8000 samples were tested across India on April 2, but the government said that testing will be need-based and will not be used as a confidence-boosting measure
  • Air India operating special flights to fly passengers stuck in India since the lockdown
  • For the first time in history, Darjeeling loses first flush tea due to suspension of garden work for Covid-19 outbreak
  • Supreme Court asks journalists to be responsible and publish only the official version of news after it was brought to its notice that migrant exodus started after the 'fake' news that the lockdown will be extended to three months
Total count stands ar 3082 as India records 16 Covid-19 deaths, the highest in a single day
oppn parties
Trump-Induced Oil Price Rise Will Be Disastrous For The Indian Economy

By Linus Garg
First publised on 2020-01-07 21:20:37

About the Author

Sunil Garodia Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

The Indian government was already suffering from two big problems: rising food inflation and falling tax collections. Now, courtesy Trump, it seems another huge problem is going to be added to that list - rising crude prices. By killing Iran's national hero Gen. Qassem Suleimani, Trump has created a war-like situation in the Middle-East and that is going to impact crude supplies from the region and push up prices. Since India sources most of its supplies from there, including a major portion from Iran, it is likely to be impacted.

Oil prices are expected to rise abnormally if the US takes it misadventure further. Trump has already hinted that if shove comes to push, he will not shy from launching a full-scale attack on Iran. The Iranians, on the other hand, have united like never before and can be expected to give a fitting reply in ways the US can never dream of. Hence, the world will have to wait with bated breath and a lot of fear for the ugly stand-off to peter out.

But for India, the situation can go out of hand if oil prices rise. They will have a direct bearing on inflation as transportation will become costly. Food inflation has started to show galloping tendencies. Part of it is due to the unseasonal rains in September-October and supply shortage due to farmers not growing certain crops as they got unremunerative price for the last few years but a major part is due to delay in the government's response to the situation and unscrupulous trade practices by traders in some places. But the common man is bearing the brunt. Any further increase in prices due to a rise in transportation costs will bring about a revolt-like situation.

The government cannot absorb the rise by reducing excise as it is already strapped for cash and neither can it ask the oil companies to bear the burden. Instead, it should do away with subsidies on agricultural inputs like fertilizer and go for direct cash transfer to needy farmers and small landholders. Subsidizing across the board benefits large farmers more. Then, to curb food inflation, the government must educate farmers about planning their sowing to get optimum supply. That would let farmers get a fair price and will help in controlling food inflation.