Thursday, June 05, 2008

Petrol prices hit thru the roof ..

After the last night hike, petrol is costliest in bangalore, about Rs 58.50 or so in Bangalore. The government has somehow managed to give the impression of not a too big raise, just Rs 5 for petrol and rs 50 for an LPG cyclinder. The prices of Kerosene has been retained for the benefit of the poor sections of the society.

The international prices of crude oil up from $35 two years ago, to $135 presently, is indeed a very alarming state of the world economy, as pointed out by the UN Sec General Ban Ki moon in the recent FAO food summit in Rome to find ways and means to tackle the present world food crisis and the high prices.

But where is all this money going to ?

Some say it is futures trading which is boosting the prices..Speculation in high prices results in a spiral effect. The money which is reaching the Gulf is being diverted back to the western world, for instance funding the Citibank who got badly hit in the sub prime crisis in US is one such instance. Very soon we will find the gulf govts investing in their defence procurements and buying real estate in US and Europe. The money from the developed and develpng govts the world over is now being rerouted to the developed economies.
The continuing high prices of oil, will damage India in more ways than one. First, it will deplete the foreign exchange reserves of the country. Secondly it will result in general inflation going above 10.0 % resulting in an overall appreciation in prices and another round of wage increases, DA increases etc..

A salaried worker will find it difficult to maintain his family and will be forced to cut down on some essential expenses in life.

Politically this may boomerang to give Congress a big hit in the coming general elections if the opposition use this opportunity to to raise public emotions against the govt, even in spite of the inevitables happening.

Let us wait and se...



  1. Does the Congress stand a chance even otherwise?

  2. since this is a worldwide phenomenon , who ever comes to power will have a tough time.. we can only hope to see that there is no all round inflation as a result of this.

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