Pass on Crude Oil Benefit to Public as Govt are always Third Class Investers and Spenders of money

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by kharb, Feb 15, 2016.

  1. kharb

    kharb Well-Known Member

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    I had posted many times that Indian govt is rare in the world who has not passed on crude oil benefits to Indian consumers.Even if Govt had passed 80 % of benefit to public,it would been a great boost to Indian consumption story that would have boosted Indian Economy and Indian industry would have been thriving on increased consumer spending,but Govt failed to do so and this is the main cause of slowdown and banking NPA,job starvation,weak consumer confidence and no capex cycle in absence of demand.Biggest folly of this govt is that they think that they can spend this windfall better than Indian public .But this is fact and happening presently also that Govt world over including Modi Govt are poor third grade investers and Spenders of money. If Govt are smart there are already having enough revenues by taxing public through their nose and creating A Big Zero after every year always.Pass on crude benifit to public as they are better invester and spenders ,and govt will also gain indirectly through more tax collections of strong economy due to more consumption by Public.This is not a political post so members are requested not convert this as political discussion.
     
    Last edited: Feb 15, 2016
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  2. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    I think fear of Govt is if price of crude goes up then how to increase petrol cost? There will be hue and cry. So better not get into Jhamela and let oil price remain at place so there is no worry when crude price goes up. It is sensible strategy IMHO.
     
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  3. kharb

    kharb Well-Known Member

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    Exactly not,if it would have been so,they could have created a separate sovereign fund instead of consuming this without trace now ,which might have worked for stabilising the future price increase.Now they will open some new wastage counter ,which will keep on creating bigger hole in Indian public pocket in form of increased taxes when this windfall will not be available .Even if they want to consume it just now,they should have create a seprate sovereign fund ,which might have been used exclusively for defence modernisation or might have been given entirely to NHAI and Indian railway for seprately funding of fresh new projects to boost economy.Just because they have mixed it with general revenue to waste it along with rest as usual without creating any thing new.This is exactly the issue of wastage I am raising.
     
  4. prashant

    prashant Active Member

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    Dear Kharbji,
    this is the most sensible thing goverment is doing , not passing the full benefit to the peoples.
    Instead these huge profits should be used to build infrastructure . Destiny has given this government a golden chance to use this crude benefit in sensible way .
    I am sure we will see a network of good roads that will save huge money and time spent on transport .

    Typical example : Vajpayee pushed for golden quadrilateral road network which is one of the best.
    It saves huge fuel and time of travel. Recently I drove on these roads 1000kms in single day and I was happy to pay the toll . I could realized good savings in fuel and time .

    Building roads is very good strategy this goveremnt in adopting .
    Roads been built from 3km/day (previous government) to 16+ kms per day (present) with target of 30kms / day .
    Isn't it amazing ? We peoples stopped appreciating good things, so very few of us noticed the long term benefit . we are being just selfish to ask for cheaper fuel .

    Only thing I am concerned, government should have been refrained from giving salary hike to sarkari babu's with crude savings . I wish government should have pushed these hikes few years later. Wonder if really these increased salaries will help our economy.

    I saw you are raising a valid point on usage, if really these funds are used for infrastructure or defense .

    Thanks & Regards,
    Prashant
     
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  5. w4wealth

    w4wealth Well-Known Member

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    as dear friend @prashant said we cannot unsee the govt spending in infrastructure space. last week or so govt sanctioned 28000 cr of projects. this is huge as compared to earlier time.
    @kharb ji when the roads built in a day jumps from 3 km/day to 16 km /day , it is not a small change.it is quantum leap. new NH and roads are built in timely, efficient, well planned manner with much low corruption at the highest levels. these are big changes i think.
    The best thing i think is that the huge govt infra spend will initiate heavy pvt investment (atlest in and along the new roads built and cities developed)which will boost public spending ( thru wages/salary), commodity demand (construction) in cycles.

    The negative effect with passing on savings of crude price fall is that it will lead to high infaltion levels on high demand for food and housing . which will lower public savings and negatively impact consumption and pvt investment.
     
  6. w4wealth

    w4wealth Well-Known Member

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    I think govt is doing sensible thing by not being populist for short term gains of both govt and citizens. govt taking some good decisions for long term gains is a good sign of honesty of this govt.
    @kharb ji i read somwr that with every 1$ fall in crude price india saves 1 billion $ ie., 6500 crores. back of the envelope calculation gives an amount of 60 b $ (crude price fall from 100$ to 40$) being saved ie,. 3,90,000 crores. for 130 crore indians it is a saving of 3000 per head. casualy thinking if we get 3000 rs we will spend it for something rather than invest in some asset. so when govt saves this amount and spend it on infra , it benefits whole india .so it is big picture issue ad i think think the going is good.
     
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