Stemming fuel price rise

The skyrocketing increase in the prices of petrol and diesel over the weeks and the unprecedented decline in the value of rupee are worrisome developments for the Modi-led BJP government, which can ill-afford to be a mute spectator by attributing them to external factors. Agreed, there are external factors such as fall in oil output, high demand for the dollar and crippling economic sanctions against Iran by the US which have contributed significantly to a discernible decline in the value of currencies of developing economies and increase in fuel prices. But it is incumbent upon the Centre to unleash measures to mitigate the negative fallout arising out of external economic developments on the domestic economy. Ballooning current account deficit in the face of ever increasing hike in fuel prices is a cause of serious concern. Bringing petrol and diesel within the ambit of GST by evolving a consensus with States brooks no delay.

Sholavandan, TN

A decade after collapse of Lehman Brothers of the US, has global finance learnt its lessons? Bidding adieu to gold-backed currency system, the era of leveraged finance let in explosive liquidity to global markets. In time, slack regulation that placed no emphasis on collaterals, enabled institutions to issue of huge debt with scant regard for supportive equity. This abetted greed for excessive profit. We might analyse endlessly the Wall St collapse of 2008, but given the neo-liberal policies, it was destined, except that it was so huge. In all this, the treatment of AIG and Lehman is a study in contrast. Whereas policy-makers believed AIG’s insurance business remained a going concern and that it had sufficient collateral to borrow from the central reserve at low risk to taxpayers, Lehman’s status as a going concern was highly suspect on its capital position and access to cash. In short it had no collateral to offer. AIG was given a $182 billion bailout and Lehman, abandoned. The issue is not so much about improvement in transparency of financial systems through these years, but whether the elite axis of politics-finance, would willingly let it happen.

Navi Mumbai

This refers to ‘Much money, but few investment options’ (September 11). The claim of ‘few investment sector options’ does not appear to be quite right. The equity market is quite vibrant and SEBI beefing up surveillance is with a view to protect investors’ interest. The basic requirement for investors to enter the market is some knowledge about the companies they are investing in, especially the growth, stability and safety aspects. Recent trend shows strong growth of the mutual funds sector as well. The returns in terms of NAV and even dividends have been satisfactory. There are several other investment options like bank deposits government schemes, which offer reasonable returns. The expansion of urban areas and development of villages have created more opportunities for investing in real estate.

Coimbatore

The initiative to promote electric vehicles is a welcome step, especially with mounting inflationary pressures on account of a relatively devalued currency, inflated fuel-import costs and a need to control the fiscal deficit. It is important that feasibility of an alternative fuel be evaluated. Electric vehicles, may well be a viable option, keeping in view the associated benefits — nil fuel cost and zero hydrocarbon emission. Besides being cost-effective and eco-friendly, e-vehicles are easier to maintain and have lower noise pollution levels. However, a varied infrastructure backed by high-investment is required to establish electric fuelling/recharge stations and tap economical sources to overcome shortage of power.

New Delhi

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