Double Whammy—Inflation and Oil Prices

Hello Padmini:

I liked your ability to articulate the problem, but I strongly disagree with your solutions, with all due respect.

- There is nobody to blame here but the Government, and specifically the finance ministry. They kept increasing the oil subsidies and DID NOT FOLLOW THE ADVICE OF THE PETROLEUM MINISTRY; thereby compromising the energy security of India.  Firstly, let us assign blame where it belongs. Let us point fingers and name names. In my opinion, Mr Chidambaram is solely responsible for the crude oil mess. He created a distorted worldview to the citizens and investors, giving a false sense of security that oil prices will remain constant. That bred malinvestments in the industry (airlines, transport, etc etc) and the individual (real estate, autos, etc). Now, it has created this huge ENTITLEMENT MENTALITY. People think that the government CAN control prices and hence, must do so.  

- I don't even want to get into the 'moral hazard' aspect of the oil bonds. Why should the government subsidize oil? Why should a guy driving a V6 Mercedes get any subsidy? If we have excess monies to blow away, why not subsidize WATER, a far more valuable commodity...anyways, thats a topic for another day. 

Your solutions seem to penalize the consumer, as though the consumer was somehow responsible for this problem. That is not being fair. Why does the citizen have to make these sacrifices in order to rectify the problems created by the government?

I agree with you that we NEED TO REVOLT.  But I disagree that we should not revolt against the government. I SAY WE DO NEED TO REVOLT AGAINST THE GOVERNMENT! Thats the source of all the corruption, bad economic decisions.  The government has been squandering national wealth, shoving the middle-class into poverty and has become a national dead-weight.  

Change will only come once this GOVERNMENT SYSTEM is uprooted and replaced with a more prudent one.

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Ramadoss's fart a public health hazard!

News is fake....I made it up.

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Petrol Perils--Hike or Spike

Excellent article.

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Hon PM Manmohan Singh hands over testicles to Sonia Gandhi.

Did I hurt your delicate sensitivities?  Awww....I'm sorry.  Please send me your address and I'll send you a teddy bear with a cute postcard.

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The great Indian oil problem nobody wants to talk about!!

You are absolutely right about the credit squeeze.  I'm sure government, private corporations and individuals are already finding it tough to raise money in credit markets; with interest rates being so high as it is and credit spreads increasing as well.  

Whether or not these strategies work in bringing down inflation, time will tell...but one thing is for certain that real estate in India is going to come down crashing.

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