On Oil Prices, Inflation and Sustainable Development

This article is the child of a discussion me and a few of my friends had recently. The arguement was basically about whether oil prices in India should be subsidised or not and are these prices and inflation related.

First a few graphs:




First graph shows the inflation pattern over the last few years, the second shows where we are compared to the world and the third is perhaps what caught my attention the most; credit and deposits variation over the years. Clearly they point out the same thing; that somehow whatever stock markets rises we have experienced in the last 10 years has not been out of sustainable development. We suddenly opened our doors to the global contenders and that has had an adverse affected our economy. How many students today opt for courses like B.Sc in Agricultural Sciences? We are a big nation, we cant possibly mimic countries like Japan, France, Germany etc. They can forgo agriculture and concentrate completely on processing industries. We on the other hand have such great raw material resources which are now left to waste silently or exported to some other country where they add huge value to it and sell it back to us. The students cant be blamed either, they want job safety and will take up paths that get them there. Nobody can worry about the nation with a hungry stomach unless its a revolution. The way I see it, we are not amidst any revolution, rather we are caught in global currents and being drawn into serious troubled waters.

One more interesting graph would be :

Education has been the worst hit. Inflation in tuition fees means people will opt out of higher studies. With engineering colleges springing up like mushrooms all over cities, how many students can actually be employed? Though loans are available, without jobs students can do nothing but see the interest piling up.

Thanks to the banking policies where getting loans are often more easier than opening a savings account. They play on our disires and we make our lives more and more miserable by giving in.


At the end of the day, if this were to be just a phase, then we could have held on tight to the ship. But if were have been sailing without a bottom all along, then what element of truth exists in all the passionate statements made about our country's progress? I still feel, though with all the emotionless policies, China has done much better. Sustainable development has lost its meaning completely. Bangalore has had such a huge influx of the poor from Bihar, UP etc that I am tempted to say that slums in Bangalore will surely compete with Mumbai, soon enough. With growing disparity, if the economical policies are not balanced then there is no hope for more than 70% of the population. Only a small class of city dwellers have had such a hike in their purchasing power that even if oil prices are doubled they would still be coughing out smoke with their sedans.

A few methods we thought were reasonable were:
1) Remove subsidy on oil for private use, but subsidise public transport and household LPG. That way we could reduce unnecessary usage of oil for personal comfort yet keep common men afloat.
2) Increase the taxes in MNC's.
3) Improve the food storage. So much of food material rots in basements while people go hungry in India. The distribution and storage is incorrigible.
4) We are going for N-Deal but we have so much scope to improve our powere distribution grids. The the transmission losses if reduced can light up many more villages and reduce load shedding.