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LATEST NEWS UPDATES | Retail inflation is not just about petrol, diesel -TS Ramakrishnan

Retail inflation is not just about petrol, diesel -TS Ramakrishnan

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published Published on May 16, 2022   modified Modified on May 17, 2022

-The Hindu Business Line

Rather than cut fuel prices, encouraging farmers to step up cultivation of oilseeds and raising LPG subsidy and vegetables will ease food inflation 

It is true that a reduction in the prices of petro products will result in a modest fall in the prices of various commodities. However, the reduction in petro prices will happen only when both Central and State governments forgo a substantial portion of the tax collected or when public sector oil companies bear additional losses, or both. If there is certainty that international crude oil prices will fall below $80 per barrel in a couple of months, the government and PSUs may bear the reduction in taxes and losses, respectively, and bring down the inflation. There are, however, no signs that indicate this trend at present.

Unless the oil import deal with the Russian government succeeds, where Russia commits to supply a substantial portion of India’s crude oil demand at 30 per cent discount compared to international crude oil price, there seems to be no relief for India on the crude oil prices front. It may not be, therefore, wise on the part of the Central/State governments to reduce oil prices now, as this will be seen as lazy policy-making to bring down inflation.

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The Hindu Business Line, 16 May, 2022, https://www.thehindubusinessline.com/opinion/how-to-get-contain-cpi-inflation/article65419229.ece?fbclid=IwAR1s99QQwrxS6TfY3d7xiS3IP8p_Fb7546-oFONg5oW4SAcpFTf0UHT0OCo


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