Mumbai: Is the weak domestic demand, coupled with rising oil import bills, rising gold and silver prices, add to that the Iran-US stand-off over oil exports, US-China trade stand-off are leading to economic slowdown in the country? Market analysts and economic experts argue that the Wholesale Price Index (WPI) which was 5.22 percent in September 2018 has come down to 1.08 percent in July last, indicating a weak demand. Moreover, the news of Maruti Suzuki announcing two days of No Production days at its Gurugram and Manesar plants in Haryana on 7th and 9th September is only making the economic picture look more grim.
The US stand-off with Iran which began in May 2018 over latters nuclear deal is now a sparring match over Irans bid to end its oil blockade. Add to that the tariff war between US and China is only adding more fuel to fire, not to speak of the nuclear saber rattling from Pakistan over the Kashmir issue. The oil import bills have seen a steady rise since April this year. Matters have only been compounded by the sudden rise in prices of Gold and Silver in recent few days. The drought and floods in some parts of the country have only put more stress on the economic growth.
According to the official data of the Petroleum Planning and Analysis (PPAC) between April and July this year the net Import of crude oil and other petroleum products has ranged between Rs 49,717 crore in July to Rs 58,133 crore in April earlier this year. As against this the net Exports for the same period have ranged between Rs 22,921 crore in May and Rs 17,693 crore in June. The oil import dependency has risen from 82.9 percent in 2017-18 to 83.7 percent in 2018-19. Add to that the Gold prices for per 10 gram of 24k Gold has touched Rs 40,000 and Silver prices range between Rs 1,450 to Rs 46,550 per Kg.
It is not without any rhyme or reason that the Cabinet Committee on Economic Affairs on Tuesday approved the proposal to hike procurement prices of Ethanol for Oil Marketing Companies substantially. Taking the cue from the rising oil import bills, Union Minister for Finance Nirmala Sitharaman in her maiden union budget speech on July 5 announced the reduction of GST on Electric cars from 12 percent to 5 percent. She further announced an Rs 1.5 lakh Income Tax deduction in interest paid on loans availed to buy electric vehicles. The move was seen as a clear attempt by the government to reduce dependence on crude oil.
