Thread by @oarhtanirs

Common man often grudges that Modi govt did not reduce petrol price when crude oil prices were dropping.

Let's see y

1. petrol was deregulated in jun 2010 n diesel in 2014
2. Pls see the attached picture for trend of crude price vs petrol & diesel prices from 2006 to 2016

1/n

3. As u can see between 2009 and 2014 crude has climbed up every year however petrol and diesel have not gone up in similar proportion. This difference was met through subsidies.

2/n

4. Subsidies r jst anther form of expense fr govt. betwn 2009-14 govt was borrowing 2 keep fuel prices low.
It's lyk takin personal loan (PL) 2 pay housing EMI & believing thy r nt paying loan EMIs at all. Thy nw hv 2 repay PL also. borrowed money hs 2 b repaid sometimes.

3/n

5. What was impact of higher subsidies on aam admi?
it meant higher CAD which RBI looks at 2 decide on interest rates. RBI hd 2 increase interest rates resulting in aam admi paying higher EMIs. It also meant industries couldn't expand resulting in slow down of economy..
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6. This is when Modi govt took over & as luck wud hv it intl crude oil prices drop drastically but Modi govt didn't cut fuel prices in sync with crude oil prices. This helped them to recoup major part of the subsidies bill which is now almost wiped out for petrol and diesel
5/n

7. This hs resulted in almost 200-250 bps redn in int rates (which RBI n banks cud hv reduced evn more if thy wer not reeling with NPA problems)
8. v often benchmark UPA time fuel prices with current prices bt tht's not a benchmark as those prices were laced with subsidies..
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When crude was 150$ petrol prices shud hd bn probably 120-130 rs without subsidies. if you compare wrt that prices levels you will see that Modi govt has actually done wonders in fuel price management while all along wiping out the fuel subsidies bill.
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8. What has Modi govt done for fuel price management in long term??
A. His govt has set a target of 2030 for complete shift to electric vehicles so over next 12 yrs we will see a phased reduction of fuel dependency
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B. Indian railways has started the move from diesel engines to electric engines which will completely eliminate their diesel requirement. Even diesel engines can now b converted indigeneously to electric engines
C. Increased focus on renewable energy generation
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D. India is now buying crude frm Iran (despite sanctions frm USA) & Russia in INR instead of USD which helps to strengthen the rupee thus reducing fuel costs..
So as u can c modi govt has used the situation to their advantage to bring long term benefits to Indians
JAIHIND
10/10