The Hindu Business Line : Timely measures urged for tackling oil prices, inflation

Hyderabad, July 27 Rising inflation and sudden spurts in price of crude oil have a negative impact on the economic growth and the common man gets hit the hardest.

Unless timely measures are taken, an extended phase of this spiralling price can adversely spill over to several sectors that in turn would derail the high growth rates that the country was projecting. Therefore, measures that can rein in inflation and offset the effects of high crude prices need to be put in place.

Making suggestions from different perspectives, speakers at a panel discussion on ‘Oil prices, inflation-effect on Indian economy’, organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI), wanted Government to be more prepared to meet the challenges. Dr Geeta Gouri, economist and Director (Tariff), Andhra Pradesh Electricity Regulatory Commission, said the country was yet to develop an early warning system for prices of oil and commodities.

“We react to crisis. That’s the way the Indian economy functions now. Since we are an economy in transitions, it was opportune time to put in checks and balances to absorb the sudden shocks that high crude prices deliver on the economy”, she said in her presentation.

Terming the current high prices of crude oil globally as driven more by speculative forces, she said the major challenges in front of the Government is to tackle prices and maintain subsidies.

Mr V.K. Srinivasan, Vice-Chairman, The Indian Institute of Economics, in his presentation on ‘Crude oil resources-present and future’, said it is fairly clear that the domestic oil resources are not adequate to meet the increasing demands for petroleum products from our power, transport, fertiliser and petro-chem industries. This would lead to increase in import dependence, which exposes it to the vulnerability of the rising prices. Therefore need is for a careful reformulation of policies for POL utilisation, for thermal and chemical conversion.

Mr B.G. Sastry, Past president, FAPCCI, who chaired the panel discussion, said the chances of getting more crude from indigenous resources are remote and hence we have to avoid wasteful uses of petroleum products. He added that solar energy, wind energy and hydro power are seasonal but important.

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