Friday, June 7, 2013

Misleading Propoganda by Finance Minister - Election Gimmics

We just had the finance minister P. Chidambaram doling out his propaganda on curbing gold imports and saying that they 'cannot finance' the same. The average imports of gold have been 20-25 MTs per month from the time gold prices crashed in the international market. At USD 1400 per ounce, 21 MTs of gold implies an expense of USD 700 million. The government has no obligation to finance the same as retail investors and the jewellers' groups have bought this in hard cash to whatever has been the prevailing exchange rate.

What the elite finance minister is not mentioning is the huge leakage of revenues in crude oil imports!!!

Under-recoveries in diesel are still hovering around the INR 5 to INR 8 per litre mark due to appreciation of the rupee

The real culprit is the under-recovery of INR 25 to INR 40 per litre on kerosene [consumed at almost 5 litres per person per month from the bottom of the pyramid camp of almost 200 million people in India; it is this class that ensures 100% voting turnout]

What is most intriguing is that even the elite journalists from media from NDTV Profit to CNBC TV 18 to Zee Business are simply using silence. They have energy and inclination to yell on top of their voices on petty cases reported as news to increase TRPs but sadly nobody even questions such remarks when uttered by the finance minister.

Not that opposition parties will talk too much into this as they too are heavily dependent on maximum votes from the less fortunate people of India and equally heavily dependent on the educated class taking election day as a holiday and not exercising their votes.

Mr. Chidambaram - you may fool the journalists and some people but please try and understand that people in general are not fools. You have been harping about the gold imports relentlessly for quite some time now but can you be kind enough to address the real problem i.e. crude imports. The first step is to eliminate kerosene completely and allow subsidies for alternative energy sources. At least that gives a one time cost and alleviates problems to a large degree than to perpetually keep subsidizing kerosene [for which RBI has to auction debt to finance and the tax payers pay the interest on sovereign debt]

1 million paid for in cash in full by the consumer for gold; is that the problem or USD 20 billion+ paid for under-recoveries of kerosene and all other oil subsidies through tax payers' money is that the real problem???

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