Letters to the editor dated February 16, 2021

Prices of auto fuel and cooking gas are now at an all-time high despite relatively low global crude oil prices. The common people, needless to say, bear the brunt of the steep rise in prices. The cascading effect of the hike in the prices of petroleum products on essential commodities is bound to make many low income families struggle to make ends meet. For instance, the prices of vegetables and fruits have doubled and even tripled due to higher transportation cost. Taxes on petroleum products account for a big portion of their exorbitant and unaffordable prices. An unintended benefit could be a return to walking and the cycle, something that bodes well for the environment. The government has advised the citizenry to switch over to alternative fuel, mainly electric power. People now seem to take high fuel prices in their stride despite an aggravation of economic hardships due to them. Before the assumption of power by the BJP the fuel price hikes used to provoke agitations. Now the government is under no great pressure to roll back the fuel price hikes, thanks to the inexhaustible supply of political goodwill it enjoys.

Maruthancode (TN)

With reference to the Editorial ‘On the mend’ (February 16), we must view not only the Q3 results of India Inc with some caution but also the euphoric climb of Dalal Street indices. Earlier a spurt in auto sales found us clutching at stretched hope. Now we are now looking askance at disjointed quarterly results. The dated Nifty composite is long due for a rework. It has not kept pace with the change in the character and depth of key sectors. Thus indices neither reflect the true economy.

The uplifting Q3 numbers shows that the economy is over-dependent on consumption that could well taper now. Add to this the reduced rural and social welfare spending with cuts in MGNREGA and PM Awas Yojana. Low interest rates will not automatically soften a tough job market even as rural purchasing power stagnates.

Importantly, the gross fixed capital formation in 2021-22 is slated to be 25 per cent lower than pre- pandemic levels — the long-term trend too, is not heartening.

Navi Mumbai

With reference to the article ‘Reducing the compliance burden’ (February 16), productivity and economic growth invariably depend on the ease of doing business and the seven point frame work suggested is really a thought provoking. The present complex regulatory frame work is designed in such a way that, any non-compliance would tantamount to attract punitive measures in the form of taxes, penalties, levies , cess etc. being imposed by the administrator on the defaulter, increasing the tax revenues.

However, the drudgery involved in the paperwork, running around various places in sourcing of specific requirements and ensuring timely submission diminishes the interest in doing business. An automated common platform which would guide, provide the documents and assist in the compliances would definitely enhance growth.

Bengaluru

Changing interest rates and the supply of money, are the major instrumnts of the government’s monetary policy. The Open Market Operations to be conducted by the RBI on February 25 by purchasing and selling of securities for an aggregate amount of ₹10,000 crore each, are also intended to manage the yield curve (February 16).

By this Operation Twist (OT) the RBI purchases longer Government securities (GSs) and sells G-Secs of shorter ones to manage the yield curve, by making it soften at the longer end. In the backdrop of GS prices hardening due to oversupply of paper on account of higher government borrowing, GS prices had declined.

When the RBI sells securities their prices fall, interest rates rise, and the money supply decreases. A paper asset, the security includes government debt, company shares, and company debt.

Palakkad

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