What rubbish this is a biased story,we spend a lot on oil imports,if rupee gets stronger then we have to pay less for all the imports.cheaper oil results in cheaper transportation which will reduce inflation.simple si bath hai yaaron kuch pane keliye kuch khona padtha hai........i think IT people have enjoyed enough let others enjoy the advantages of open economy.
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by Vinod A on Jul 25, 2007 09:26 PM Permalink
Well, we talk so much of reduced charges in transportation blah blah, Can someone tell me in which all states the auto or bus fares have come down? or where all did the petrol price have come down. Dudes, stop living in fantasy world. Do u really think that the benefits of the appreciating rupee will be passed on to the common man? lets see some action to believe this.
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by Natarajan Vijay on Jul 25, 2007 09:33 PM Permalink
Vinod, The petrol rates have not come down yet because the price of petrol is controlled by the Indian govt. (I think they should not control it). If petrol were produced/dsitributed in India by private companies, it would have come down already. Because it is controlled by the govt. they do not want to lower the price (eventhough their raw material cost is lower). If crude oil price is going to increase later on, they would be forced to increase petrol price which would be politically tough. The solution is to privatize this sector, as all sectors. However, the Re is lot stronger than it was 10 years ago. Have you not noticed that flying in India is also a lot cheaper that it used to be 10 years ago?
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by sreekanth agneswaran on Jul 25, 2007 10:46 PM Permalink
Mr. Natarajan, now just put this comment that you have made about petrol prices coming down (which is what common sense dictates), in contrast to the other article put up by rediff : Petrol prices are actually going to increase!!! Which is the point, I guess Vinod is trying to make!! Forget privatisation of fuel... The government is never going to kill the goose that lays golden eggs for them...
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by Rakish Poulose on Jul 25, 2007 11:38 PM Permalink
Petrol prices are much lower than what it should be to match the cost price. If oil is available cheaper, it means that the Govt will have lesser losses!!
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by Rakish Poulose on Jul 25, 2007 11:37 PM Permalink
Petrol prices are much lower than what it should be to match the cost price. If oil is available, it means that the Govt will have lesser losses!!
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by Natarajan Vijay on Jul 25, 2007 11:40 PM Permalink
Sreekanth, There are going to two forces that affect petrol prices. One of them, which should reduce it, is the appreciating rupee. The other, which should increase it, is the price of crude oil. There is a long term trend in increasing crude oil prices due to increasing global demand, especially in China and India. This trend will eventually also lead to increasing petrol prices. Because the RBI is letting the rupee appreciate, I think that indian consumer would pay less for petrol than he would otherwise. But I fully agree with you that the benefits for the consumer would not be certain unless this industry is privatized. Maybe crude oil is not the best example of the point that I was making, which is that the appreciating rupee increases the purchasing power of the indian consumer in the global marketplace.
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by Vinod A on Jul 26, 2007 12:10 PM Permalink
Natarajan, All this economic and fundas are good in the theory classes. Lets see something practically right. I mean the common man is least bothered about the laws of economics. The point I am trying to make is simple. Despite the rupee appreciation how much of the benefit has been passed on to the common man. Don't give excuses like govt is controlling and blah blah other factors. My point is simple, whatever is the condition of the rupee, the government will for sure maintain an equilibrium. The government was giving sops to exporter due to this rupee appreciation, where do u think this money is coming from? again from the common man. So all and all, u will notice there is not going to be any difference. If u can give me more practical examples than just economic theory, I could be more convinced.
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by Natarajan Vijay on Jul 26, 2007 09:25 PM Permalink
Vinod : Here are some concrete examples of how Indians benefit from rupee appreciation.
When an Indian buys a DELL computer from the US, it is cheaper. When an Indian buys Microsoft Office, it is cheaper. When Kingfisher airlines buys Boeing Jets, it is cheaper. The net effect is that they will buy more jets and invest in aviation, which will make air travel relatively cheaper. India also imports all kinds of capital goods from outside. For e.g. most of the cars sold in India are manufactured in India. But to manufacture the cars, you need captial goods which are imported. When these become cheaper, Cars will also become cheaper.
These are just some of the things of the top of my head. Simple idea is, imports is what we consume. It is what we consume which makes us rich. Exports are what we pay for imports. When I go to a shop, I try to buy as much as possibel while paying as little as possible. When the rupee appreciates, it makes our imports cheaper! This is just simple fact!
