Thursday, January 29, 2009

A missed opportunity

The government has swung into election mode by announcing a substantial decrease in the price of petroleum products. It is good for the consumer, but is it good for India overall? Granted, we have had a crash in oil prices and a period of relative stability over the past 2-3 months. But, who knows what the situation may be in 6 months. If the price of oil skyrockets, will we again go into a cycle of under-recovery and a mounting subsidy bill?

 The prudent thing for the government would have been to take advantage of the low prices to bring about a degree of deregulation. They could have revised prices on a monthly basis or even rationalized the taxes and duties on petroleum products. But that would have been too much to expect from the worst government in Indian history.

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