UPA 2 - The Economy Killer

The Economy Killer

“An Economist is a person who can sacrifice a million people just for the sake of saving an Economy” – Anonymous.

Indeed it’s true and when it comes in the perspective of India which is lead by an army of Economists (i.e., Dr Manmohan Singh and Mr P. Chidambaram). This so called great army of economists is failed to understand the need of the hour and sticking to achieve its goal of containing fiscal deficit up to 5.3% of the GDP till the nest budget which is due in March 2013.

In the recent past a number of statements were attached with Dr Manmohan Singh like “Underachiever” by TIMES magazine. Now it seems like true to everyone because of the Real Policy Paralysis.

“There can be economy only where there is efficiency” – By Benjamin Disraeli

If we go by above statement we will be able to find that Dr Manmohan Singh and His team or you can say the UPA – 2 has failed to curtail the economy related problems. At a time when rupee is troubling against Dollar, Crude Oil Prices are increasing day by day and what the government is doing is, increasing the prices of Oil and Gases in the name of reducing unwanted pressure of Subsidies on the economy.

Well when we are thinking about the reason behind this continuous increase in prices of oil and Gases we think of depreciation f Rupee and increasing Crude oil prices which is but obvious. But the question is what about the two fire accidents happened in Jaipur and Surat and responsible for a loss of millions of liters of oil, why public shall be made to pay for it when it is seriously the mismanagement of the Oil Marketing Companies or if we go by the conspiracy theories it was an effort to hide the ongoing stealing of crude oil. If you remember in the month of December Rajasthan police caught a gang of people responsible for stealing crude oil from the pipeline which is not at all possible without the help of the employees of the Oil Marketing Companies. And when this fire broke out it was just an attempt to hide this stealing of Oil and the poor public is paying for it now.

So, this clearly proves that there is no efficiency in the working of the Oil Marketing Companies and partially they are responsible for the increasing burden of subsidies on the government.

At the same time there are numerous allegations of corruptions in the fields of allocation of natural resources which shows that if there was an efficient thoughtful process has been adopted it could have generated a reasonable amount of revenues which could have helped the economy in a better.

The last point I want to mention is that a number of countries are using a mix of Ethanol and Oil which is known as E10 or E15 depending on the percentage of Ethanol in the mix. The only negative point it has is that it decrease the engine efficiency by 3.3% which is not at all a bad option when we know the impact of CNG and LPG on the engine.

But when we talk about the positives; it will certainly help in reducing the demand of imported Oil which in turn help in reducing the burden of oil subsidies on the Indian Economy. Secondly, it will help all the cane growing farmers as they will get good prices for their produces. Thirdly, when the oil prices decrease it will certainly reduce the cost of agricultural as well as industrial productions which will help in curtailing the problem of inflation in the country.

The present decisions of De-Regulating the diesel and increase in the prices of petrol and LPG will make the situation only worse as the increasing prices of energy along with the RBI policy of no decline in the interest rate is only drying up the liquidity in the market from both ends.  

The question is why? Because the increase in Oil and Gas prices is certainly increasing the prices means supporting the inflation and RBI will not decrease the rates as the inflation is rising and in this case business men as well as people will have less money to save or spend which actually end up in recession or a big slowdown.

So, if government is really concerned about the economy they have to take foresighted decision rather than short sighted.

The need of the hour is reduction in the consumption of all the imported oil and this can be done only by mixing Ethanol or by increasing the use of Bio Fuels ( from Jetropha etc.). But unfortunately government is going on the wrong way to kill the economy of India.