Inflation and the stupid Economist

Child Psychologists say that a man who has got 20 years of formal education, has irrevocably lost or damaged 70% of his IQ. I have completed 18 years of formal education by 10 + 2 + 4 years (and 2 years in kinder garden) so I must have lost 63% of my IQ. Hence I have no qualms in saying “Main panchvi pass se tej nahin hoon” ( I am not smarter than a 5th grade kid.) Having said that, I hope the readers will spare me for my stupidity and mistaken concepts regarding Inflation and Economy.

Though I don’t have much of an IQ, I have my basic chemistry intact and a little bit of common sense.
Basic crude oil Refining

Basic crude oil Refining


As seen from the image, petrol being lighter and more volatile, distills out first at about 120˚C while the diesel comes out much later at 270˚C. Obviously more energy is required to extract diesel from crude oil and as such it must be more costly. However in India we get Diesel at about INR 34 and Petrol at about INR 50. Diesel is subsidised, as India being an agro-based country needs diesel for tractors, tube wells etc.

If that’s the case then I don’t understand what the Under Performing Alliance prime-minister and the famous economist Dr. Manmohan Singh means by “subsidy cannot be given forever”

Does he mean to say that Diesel prices will be raised by about INR 15? Does he mean to say that the successive government knowingly gave the Oil companies huge losses and deliberately planned a situation where they don’t have funds to buy crude oil? Does he mean to say that in last 60 years none of the oil companies ever made a profit? And ONGC being rated in Fortune 500 is a hoax?

Unfortunately, facts tell otherwise. In Pakistan, as on 16 March 2008 petrol was INR 39.64 where as Diesel was at 24.59 INR. In 2002, petrol in India was costlier by 22% and 45% compared to Pakistan and Bangladesh respectively.

Anyways, as I said I am no economist, so before starting this post I looked up to the dictionary to know what the term subsidy means. Well, Webster defines subsidy as “a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public”. Unsatisfied with the definition I referred a second one and it defined the word more precisely as “an amount of money that the government pays to help reduce cost of product or service”.

Obviously the whole and sole aim of subsidy is to reduce the cost of product, so if the world wide oil prices are increasing, the best buffer can be to reduce the taxes on the fuel. And it is a well known fact, that if taxes are removed from petrol and diesel their prices will fall in India irrespective of the current state of the world market.

It follows that our government and Dr. Manmohan Singh thinks that leaving a tax of INR 20 on an item priced at INR 100 whose production cost is at INR 1 is also a subsidy and it cannot go on forever.

To show the greatness of our economist and our budget planners, let’s look at a very simple item. Milk in India costs about INR 20 while as a Soft Drinks are priced at INR 30 a litre or INR 42 per 1.5 litre. And before you jump to say that Soft drink is a Luxury while milk is a necessity, I haven’t finished yet. Mineral water is at INR 10 per litre!!!

Now, does the government thinks that drinking water is not as big necessity as that of milk? Or it simply wants to state that two litres of water are equivalent to 1 litre of milk? And don’t you think that 250 ml of carbonated water ( 1.5 litre of soft drinks) should be made cheaper???

It is pretty strange that we will fight with our grocer for charging 50 paise extra, fight out in court to avoid paying a rupee extra over MRP but never ever utter a single word when the government makes us pay through our nose in name of inflation. Like I said, we all have had formal education and has lost our IQ somewhere during our education.

So, what’s wrong if we pay more? We are making our country developed, Right? No wrong again!!! Let’s see how we spend the money! 5-year plan is turned into a 50-year plan of corruption. So our Under Performing Alliance (UPA) government takes pride in the sucess of the “Pradhan Mantri Gram Sadak Yojna”. It is simply a waste of money. It’s an insult to labour and mockery of intelligence.

What kind of road do they build? Is it a pitched road? a concrete road?NO. It is a road that is made of clay. Motorable during summers and with monsoon it disintegrates, and the next summer the process is repeated again. Why can’t they sanction a pitch road?

I guess, our Prime minister has done a PhD.and thus has more than 20 years of formal education and has lost more than 70% of his IQ. He is incompetent to make his own decisions and thus needs guidance in everything he does. And the God Sent guidance in form of Under Performer’s Alliance chairperson Ms. Sonia Gandhi!!!

0 thoughts on “Inflation and the stupid Economist”

  1. HI thr,

    dunno much abt petrochemical econimics but cn say this much tht, 5yr back BJP govt held back oil prices in India at the cost of govt reserves while world prices were rising. Now if the congress govt does the same then for how long??? If u r a chemicalengineer u shd kno tht oil prices are bound to rise. reserves are depleting. Plz leave the ‘blaming-govt’ thing for truck drivers and bus drivers.. we the intelligentia of the country are responsible for researching fuel substitutes…

  2. @K N RAGHVENDRA

    Thx for the link…

    @Manish

    I think you have not read the article properly. Plz read it once more… The so called holding back of fuel prices by BJP government still made the petrol costlier by 45% compared to bangladesh.

    I am not a chemical engineer, but I still know
    that we need to conserve fuel…but that does not give a right to government to increase the fuel prices as per their whims and fantasies.

    And if u are not aware check the cost of diesel in entire western market and compare those to that of petrol…You will find that in most of the countries Diesel is much cheaper…

    And my dear, what makes you think that we (that is You and I are any better than Truck drivers etc.) FYI they are supporting themselves and paying their taxes.. If I am not wrong then u might be a student…

    They too are citizens of India and if an educated fellow like u are discriminating them then given their lack of education they make a better citizen than us on any given day…

    Don’t blindly support the government !!! This is the third time they are increasing the fuel prices…

  3. Population: 1,147,995,898 (July 2008 est.)
    Population growth rate: 1.578% (2008 est.)
    Birth rate: 22.22 births/1,000 population (2008 est.)
    Death rate: 6.4 deaths/1,000 population (2008 est.)

  4. Population: 1,147,995,898 (July 2008 est.)
    Population growth rate: 1.578% (2008 est.)
    Birth rate: 22.22 births/1,000 population (2008 est.)
    Death rate: 6.4 deaths/1,000 population (2008 est.)

    WE ARE TALKING ABOUT MILK,PEPSI,PETROL ETC. BUT DO YOU KNOW THE POPULATION OF INDIA (LOOK ABOVE). WE ARE BLAMING THE INDIAN GOVERNMENT AS IF IT IS TAKING CARE OF 15-20 PEOPLE. IT IS NOT AN EASY JOB TO HANDLE SUCH ISSUES, YOU AND I CAN ONLY TALK BUT LEADERS LIKE MANMOHAN SINGH AN SONIA GANDHI ARE HAVING SLEEPLESS NIGHTS ON SOLVING THE ISSUES OF THE COUNTRY. TODAY INDIA IS NECK TO NECK WITH MANY OF THE DEVELOPED WORLD BECAUSE OF THE IQ OF LEADERS IN INDIA…….PLEASE DON’T BLAME THEM…..NOBODY COULD HAVE DONE A BETTER JOB THAN THEM……….CHEERS !! TO THE MANMOHAN SINGH GOVERNMENT.

  5. Well but how much % of population uses petrol/diesel or vehicles should also have been mentioned. The taxes which are existing should also been shown then i can have discussion with you ST. Waiting for early data.
    thanks

  6. Even though I do not have the details of how many vehicles are there in India, I am sure that it is very close to China which is anytime more than anywhere in the world. Taxation is very less compared to the outside world.
    We are in a competitive world and if we need to progress futher in this world, we need to have a vision and this cannot be achieved in a day. Every one should do their part….Mahatma Gandhiji did his part of making our country independent and we cannot expect him to come and solve the inflation and nuclear issue. It is the job of the present government to do this job and nothing can be achieved without a vision and I (personally) say that the MANMOHAN SINGH GOVERNMENT has a vision and we can see most of it being achieved and they are doing their best to make it a success at any cost…….

    Comming to BJP…..please read yesterdays news that I have copied below. Naidu says,

    “If the Left thinks that the deal is useless then why are they engaged in this lengthy discussion. They should rather start discussing other issues of public interest like price rise,” Naidu says,
    “The government is headed by an unwilling Prime Minister. He wants to leave his office. How can we expect him to take important decisions,”

    I (ST) would like to ask,
    Is this what the BJP believes, that a Prime Minister who is going to leave office will not take proper decisions for the country ?? In that case I feel BJP candidates are following this rule….how can we trust a BJP government with a Prime Minister who does not take interest in the country if his goverment (not the people of India) is at stake ??

    ACTUAL NEWS FOR YOUR REFERENCE :
    The former president of the party sought to take a dig at the meetings of the UPA-Left committee on Indo-US Nuclear Deal saying, “They meet to decide when to meet to decide on another meeting.” “The government is headed by an unwilling Prime Minister. He wants to leave his office. How can we expect him to take important decisions,” Naidu said.

    On Central Government’s advise to the states to reduce taxes to curb price rise, he said, “it is a clever ploy and cheap politics.” Naidu reiterated that his party would vote against the government if the deal is put to vote in the Monsoon session.

    “Why should we sympathise with the government. We will vote against the deal if it is put to vote. We are not against strategic and friendly relations with the US but we oppose the Hyde act,” he said.

  7. No one has any doubts on credentials of MMS but then he has not shown that caliber as a PM which he showed as FM.
    Personally i also support the nuke deal but only time will tell if govt goes ahead with the deal.
    I can list 10 countries at least which are developing or developed where the price of oil is comparatively low.
    No doubt govt gives lots of subsidies but then raising the price of cooking gas is punch in the stomach of middle class.

  8. Yes, I agree with you 100% that it is the middle class which is most affected and I am one of them. But still my conscience says that things will be solved right. The reason being, we are witnessing a country which had soared to unbelievable heights in such a short time as never in the past; sure enough if the people have enough patience and faith in the government, there will be a positive solution soon. And I like the issues and arguments going on within the government among different parties…….this is the only way to keep any government of foot because they should know that the people of India are aware and concerned about the country’s future….

  9. Sir,
    You have rightly approached the issue ,but it would have been much better if you would have shown the exact extracted amount of each product per barrel & Taxes Of Govt.This would extract the real position How the Oil companies & the Govt is befooling the innocent Public for the Benifit of Big Private oil Companies at the cost of poor exchequer.

Leave a Reply

Your email address will not be published. Required fields are marked *