Since the day Government has hiked petrol prices all the people have started criticizing about inflation and how it will affect their monthly budgets. But I would say that by not allowing the government to hike petrol prices everyone is only inviting inflation and stagnation in the country. Let me explain.
80% of your Petro- Products are imported. and with the increase in the dollar it is becoming more and more expensive to buy petrol in the international market there by creating huge difference in the balance of payment. Government of India pays subsidies to the oil company to keep selling Petrol at a price lower than its cost. In turn, it increases the pressure on the financial budget. This results in more spending on subsidies which could otherwise would have been used for more developmental projects. Also, the government have to borrow more money and in turn fiscal deficit rises causing more inflation and decrease in the productive activities. Let us understand in detail some of the factors
The current fiscal deficit in 5.9% of the GDP which is substantially high which comes to Rs. 5.21Trillion. This means the government is borrowing Rs. 5.21 trillion to make all the payments.
How government Borrowings affect Private Sector?
If the government borrows such high amount from the market then it will leave very less money for the Private sector to borrow. Which will result in less productive activities in the countries. Which means less income for the common man and so less Purchasing power. Also less productive activities means more inflation and start of stagnation in the economy.
Let the Government hike the prices. It will reduce the burden of subsidies. This in turn will also make rupee stronger there by reducing the balance of payment. This is will also send a signal the foreigners that the Government is not facing policy paralysis and they will start investing again once the rupee strengthens. Also by reducing government borrowings we will leave more money for the private sector, which will bring more development and higher standard of living for us. And with the strengthening of rupee the Petrol prices will come down too.
Everyone is thinking of how everything will affect them for the next one month but by doing so they are creating more problems for future. They ahead of the time. It will bring our country forward and solve our own problems.
Support the Government to bring a Change.
Be Aware.
Be a Proud and Informed India.
Don't follow these stupid opposition parties who just misguides the public.
80% of your Petro- Products are imported. and with the increase in the dollar it is becoming more and more expensive to buy petrol in the international market there by creating huge difference in the balance of payment. Government of India pays subsidies to the oil company to keep selling Petrol at a price lower than its cost. In turn, it increases the pressure on the financial budget. This results in more spending on subsidies which could otherwise would have been used for more developmental projects. Also, the government have to borrow more money and in turn fiscal deficit rises causing more inflation and decrease in the productive activities. Let us understand in detail some of the factors
Government Budget:
Oil prices greatly affects the Financial Budget of India. Since we import 4/5th amount of Petro- Products from the international market. International Oil prices as well as exchange rate makes a huge difference. If both the factors go up i.e. if oil prices go up and dollar becomes more expensive, we have to more for the same amount of Import. When we pay more it creates a imbalance with the Exports. The difference between Import and Export is called Balance of Payment. India has a negative balance of payment which means our imports are more than the exports which means the rupee is going out of the country which makes dollar more expensive. Since the government compensates the oil companies for the losses suffered by them a huge chuck of Money is utilized which otherwise could have been used for some other developmental activities. These subsidies means the spending on development projects and welfare schemes of the governments will come down.The current fiscal deficit in 5.9% of the GDP which is substantially high which comes to Rs. 5.21Trillion. This means the government is borrowing Rs. 5.21 trillion to make all the payments.
How government Borrowings affect Private Sector?
If the government borrows such high amount from the market then it will leave very less money for the Private sector to borrow. Which will result in less productive activities in the countries. Which means less income for the common man and so less Purchasing power. Also less productive activities means more inflation and start of stagnation in the economy.
Foreign Direct Investments
How many of you remember the opposition the government faced when 51% FDI was approved for Mutli-Brand Retail? I believe all of us know. Public never realised that they have dug their own grave by opposing it. If FDI would have been allowed then it would have brought a very large amount of Foreign Capital in the market. Which would have benefited the common man substantially. It would have brought down the prices of goods plus it would have balanced the fall of rupee. But because of all the opposition it could not come. All this crises have made the already existing investors to take away their money from our country. There by make Rupee weaker and weaker.Let the Government hike the prices. It will reduce the burden of subsidies. This in turn will also make rupee stronger there by reducing the balance of payment. This is will also send a signal the foreigners that the Government is not facing policy paralysis and they will start investing again once the rupee strengthens. Also by reducing government borrowings we will leave more money for the private sector, which will bring more development and higher standard of living for us. And with the strengthening of rupee the Petrol prices will come down too.
Everyone is thinking of how everything will affect them for the next one month but by doing so they are creating more problems for future. They ahead of the time. It will bring our country forward and solve our own problems.
Support the Government to bring a Change.
Be Aware.
Be a Proud and Informed India.
Don't follow these stupid opposition parties who just misguides the public.
When all pleas fall on deaf ears. When all options of advise die down. When elected Govts behave as per their whims and fancies. When the common man is really hit under the belt by his on representative, then bandh is the only option left to him. Here teh UPA and especially the Congress has become very adamant and this bandh is justified. Let people resolve to put an end to Congress rule.
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