Opec remains relevant
Apropos of the column “Oil price: boom, bust and boom again” (December 26), the data from the past four decades show that elevated oil prices had been co-terminus with surge in global economy. Prior to the economic crisis of 2008, most nations, in particular, the advanced economies, were doing very well and world trade was flourishing. Global trade, indexed at 50 in 1990, improved to 100 in 2000, shot up to 250 by 2008, prior to the global crisis. Crude was languishng in the sedentary decades prior to 1990 at around $35. The decade 2000-2010 was significant for crude oil, both for its demand and pricing. As global trade peaked, so did crude, shooting to an unprecedented high of $145 in end-2007. When global economies sufferd post 2008-09 ,Brent crude fell to $90 by end-2010. It has been averaging $115 from then on, till the recent big dip. During this period, the epicenter of growth was also shifting to nations dependent on oil-import and so has the pattern of energy consumption. In such a backdrop, prolonged low price of crude portends a stasis in world growth, and hence, trade. Export-driven economies like Brazil, China, in the absence of growth-led demand elsewhere, may not be as enthusiastic over the price dip.
Ordinance route the right way
Apropos of the report ‘Insurance,Coal reforms take ordinance route’ (December 25), the finance minister announcing that the government is taking the ordinance option for coal and insurance sector reforms may be out of abject necessity, but rthe matter appears headed for the convening of a cjoint session of Parliament if the stasis in Rajya Sabha is relplayed in th next session. The prime minister has learnt the bitter lesson that ruling Gujarat and India is not the same task. Further, the BJP’s resistance to important UPA government bills has now boomeranged on it with the opposition parties remaining recalcitrant. But then this is more or less expected in Indian politics where national development takes the back-seat. With FDI of around $10 billion expected to come in to insurance sector and coal block auctions completed by March 2015, the economic scenario will change a lot, facilitating the government to initiate steps to open the infrastructure and telecom sectors which need huge investments that are beyond the reach of the government. So, the government must strike as long as the iron remains hot and take the full advantage of the historically low crude price, so that the coveted growth rate of 6%-plus is achieved in the next fiscal and the CAD is kept within 3% of GDP in this fiscal. Additionally, reforms in the land Act and central labour laws need to be expedited for rejuvenating the Indian economy.
New GST a sham
Apropos of the column “GST: Unified tax, myriad challenges” (December 26), the Centre might have got the GST in, but at a great cost. The new form of the tax is so convoluted and twisted—all to accomodate the unyielding states which fear loss of revenue, albeit without any ground—that the tax, when implemented, will benefit little; more so, if the revenue neutral rate remains in the upper 20s.
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