An unaffordable burden

The motto 'aam admi' and the strategy inclusive growth of UPA now under tizzy. Petrol price has been hiked with an increase of Rs. 3.14. In last four months, there has been an increase of Rs 8 per litre. The price was Rs 58 in April, which increased to Rs 63 in May, which was considered to be the highest price hike of the century. And again there has been an increase of Rs 3.14 taking the price to Rs 66.51 per litre. Adding displeasure to this unfavorable decision, RBI hiked bank rate by 0.25 percentage points (or 25 basis points or bps) from 8 per cent to 8.25 per cent. Following the hike in the repo rate, the reverse repo rate (the interest rate at which banks park surplus liquidity with the RBI) has got adjusted upwards from 7 per cent to 7.25 per cent.The RBI has already hiked policy rates 11 times since March, 2010, and this 12th but similar strategy is an  attempt to tame demand and curb inflation. At the same time all the measures failed achieve the goals and growth rate stunted. Industrial production fell to a 21-month low of 3.3 per cent in July. Economic growth in the April-June period stood at 7.7 per cent cent, the lowest in six quarters.This both now increased the burden of people and become unaffordable.

In the another side, the three public sector retailers — IOC, Bharat Petroleum and Hindustan Petroleum — have lost Rs 2,427 crore (till September 15) on petrol and  their losses would have been Rs 15 crore daily if it was not revised.  And it will lead to inflation, if Government go with the increased subsidy to oil companies.