Oil 1 Peak Oil 21
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- India – Inflation Extension
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India AdvantageA. Continued high oil prices will devastate India’s economy Sushma Ramachandran, economic analyst, 4-10-08 http://indiainteracts.com/columnist/2008/04/10/High-oil-prices-could-hit-Indias-growth/, High oil prices could hit India's growth, India Interacts India's hopes of reaching a 10 percent growth rate on a sustained basis may be dashed if oil prices continue to rule at over $100 per barrel. Even the Planning Commission in its approach to the Eleventh Five Year Plan has estimated that high oil prices could affect the growth rate by up to 0.5 percent. If this assessment, clearly a conservative one, is correct then the country will find it difficult to continue on a high growth path for the next few years. As of now, there is no indication that oil prices will climb down from their present Himalayan heights. In fact, Goldman Sachs has even made a projection that prices could reach up to $200 per barrel. In such a scenario, emerging economies like India and China that are among the largest oil consumers are going to be hard hit. India's oil consumption may not be as high as that of China but it is among the top 10 oil consuming countries in the world. Officials of the Organisation of Petroleum Exporting Countries (OPEC), the cartel that controls about 40 percent of the global oil supplies, have recently said that the demand for oil is no longer largely from OECD countries. They contend the market is now dependent on consumption by India and China rather than the US economy, which has also been battered by high oil prices. OPEC is clearly in no mood to raise production, which could help to stem the continuing rise in crude oil prices. The oil cartel is actually arguing that by retaining the existing status quo on production quotas, it has helped stabilise the international oil market. In view of the grim outlook on the oil front, it is time for the UPA government to adopt an appropriate strategy to deal with the fallout of a huge oil import bill. Estimates are oil imports will cost over $50 billion in the current fiscal. For the time being India has sufficient foreign exchange reserves to finance these imports. But the increasingly high cost of imports will put pressure on the trade deficit which is enlarging at a rapid rate despite the fact that exports are growing at healthy double-digit levels. Inflationary pressures on the economy are also mounting despite the fact that the entire increase in global prices has not been passed on to the domestic consumer. Though there has only been partial pass-on of fuel prices, inflation has risen to 6.7 percent, creating concern in the government with a slew of measures being announced recently to curb further price rise. In case world prices continue to rise over the next year, as has been predicted by some analysts, the pass-on may have to be larger despite political compulsions of the forthcoming general election. The impact is already being felt in some sectors of the economy like aviation. Domestic air carriers have announced a hike in fares to cope with the increased prices of aviation turbine fuel. This in turn will affect the booming travel and tourism industry. And this is not the only industry that will be affected by higher fuel prices. The impact will be felt across the board by industry, leading to increased production costs and ultimately higher retail prices. In case this converts into a fall in demand, there could be an impact on the overall growth rate of the manufacturing sector, which has been a major contributor so far to the high GDP growth. Strong Indian economy key to prevent war Jeffrey E. Garten, Under Secretary of Commerce for International Trade, 1995 Lexis-Nexis, INDIA AND THE UNITED STATES: Moving Beyond The Era of Missed Opportunities, Congressional Testimony, Federal Document Clearing House Paramount among those interests are the commercial opportunities that are increasingly at the heart of the Clinton Administration's foreign policy. But it is impossible to separate those commercial interests from our broader interests. Economic reforms enable our companies to take advantage of the opportunities within the Indian market and enable Indian companies to better enter the global marketplace. Economic growth in India is a powerful stabilizing force in a region of the world where stability is of supreme.importance. Stability and growth in India are of enormous importance through southern Asia, from the Middle East to Indochina. Peace and prosperity in that part of the world are essential to the peace and prosperity of the world. India – Inflation ExtensionOil prices have swelled inflation in India Economic Times, 6-23-08 http://economictimes.indiatimes.com/News/Economy/Indicators/Oil_shock_has_been_externally_imposed_on_India_Reddy/articleshow/3157416.cms, Oil shock has been externally imposed on India: Reddy Despite the 'oil shock' that has sent the inflation galloping, India was 'safe' in regard to the financial sector and the outlook is "optimistic" on the food front, RBI governor Y V Reddy said on Monday. Stating that the oil shock had been "externally imposed" on India, Reddy told reporters here that " as of now fuel prices are the main, though a difficult problem. The macro policy can focus on this in the background of some strengths in many other aspects." "We have to manage the shock and smoothly adjust to near realities taking advantage of our strengths in real sector also," the RBI Governor observed. Terming the concern over rising inflation as "legitimate", Reddy said "the high level of energy prices may not necessarily be temporary. So the whole economy and indeed our society is better off adjusting to the possible new reality of high and volatile fuel prices." In this specific context, the RBI's effort is to "smoothen" and enable this adjustment to a "new reality" so that inflation expectations are contained, he noted. Oil is driving massive Indian inflation Rajesh Kumar, economic analyst Outlook Money, 7-16-08 http://inhome.rediff.com/money/2008/jul/16infla1.htm, How best to tackle inflation, Rediff News The inflation fire is now an inferno. It singed wallets on its way from 4.7 per cent in July 2007 to 8.86 per cent in May 2008. It did not stop there, but shot up to a 13-year high of 11.42 per cent for the week ended 14 June. Much of this recent rise is being attributed to the pervasive impact of the increase in the state-administered prices of oil products on 5 June. That looked inevitable after international oil prices rose to an all-time high, up to $140 a barrel last fortnight. Worse, this inflation is not expected to go south anytime soon. Says Shuchita Mehta, senior economist, Standard Chartered Bank: "We expect inflation to remain high for some time and to average 8.72 per cent this fiscal year." Why high inflation is here to stay Oil aftershock. With little chance of increasing global supplies, higher extraction costs, production cuts and export taxes in some oil producing countries, and speculative investments in oil by large international investors has buttressed price pressures due to continuing high demand for oil. Expanded inflation will curb profits and increase unemployment Rajesh Kumar, economic analyst Outlook Money, 7-16-08 http://inhome.rediff.com/money/2008/jul/16infla1.htm, How best to tackle inflation, Rediff News The immediate impact of high inflation will be pressure on household budgets, and lower savings, both for now and the future. Higher interest rates are pushing up EMIs. Inflation-adjusted returns from fixed income options, be it fixed deposits or pensions, have gone negative. Five-year term deposits paying 8.5 per cent when inflation is 11.5 per cent are giving real returns of -2.69 per cent. So, the value of what you get back is lower than what you put in. The future's not rosy either. Higher costs due to high inflation is likely to dent corporate profitability, putting downward pressure on stock prices. Some sectors, such as aviation, could see layoffs, while fewer people will be hired by IT, BPO, and banking and financial services companies. A recent services employment report for April-June 2008 by staffing company TeamLease said ITeS lost the most (-24 points) on its index of increasing employment. India - TransportationHigher oil prices threaten India’s economy – truckers are on strike BBC News, 7-1-08 http://news.bbc.co.uk/1/hi/business/7484101.stm, Fuel price forces India's truck drivers off road, BBC India Business Report Mr Mehta is one of four million truckers who have gone off the Indian roads in an indefinite strike to protest against rising fuel bills. Trucks in India India's truck drivers struggle to make money The soaring global price of crude oil has forced the Indian government to cut subsidies and raise prices. Truckers have been hit hard by oil prices which have risen by roughly 40% since the start of the year. A similar week-long strike in 2004 slowed down the annual growth in industrial output to 7.9% from 8.4% in the previous month as the strike disrupted shipments. Vital supplies Charan Singh Lohara of the All India Motor Transport Congress insists truck drivers "have no choice but to stay off the roads. "We are already running under huge losses. The cost of diesel is so high that we have nothing left to live on. The government must reduce the multiple taxes to compensate for the increasing cost of fuel." Directory: file -> view view -> Western Europe after wwii view -> Author study: paul fleischman view -> Qpa1 7ela study Guide view -> Arctic Oil/Gas Neg view -> November 1970 Approximately 150,000-500,000 deaths Bhola Cyclone Bangladesh view -> Grade Level: 6 Unit of Study: Caribbean glce view -> Citation: Duffield, Katy view -> Table of Contents Lesson # view -> Chinese Wind Energy Disad Download 9.54 Mb. Share with your friends:
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