You are here: Home » Opinion » Letters
Business Standard

Letter to BS: US jacking up oil prices will hurt them in the long run

Emerging economies with large fiscal deficit will exercise restraint in the import of oil, resulting in an economic slowdown. This will impact the global balance of trade negatively

Business Standard 

Interim Budget 2019: FM has cheap crude oil to thank for his fiscal record

This refers to “at $100? What it means for India, world economy” (April 30). The abrupt scaling up of prices by the US will only have a short-term advantage for them. is a basic supporting commodity for most economic activities and not an independent product. Emerging economies with large fiscal deficit will exercise restraint in the import of oil, resulting in an economic slowdown. This will impact the global balance of trade negatively. Although in the short run, the rise in will be neutralised by trade in other commodities, inflation will subsequently impact all economic activity even in developed economies.

The impact of inflation will be apparent in the US economy also. The US being a developed economy with adequate raw material, its capacity to meet global demands along with other oil rich nations will be insufficient. Hence, it has to ultimately align its oil trade policies in favour of India for an amicable exchange of trade. The impact of inflation will thus be as economically damaging to them as it is for other global nations. Central banks also need not fear a flight of capital as there is no scope for a shift in investment in stagnant global environment. Finally, an aggressive approach with frequent devaluations and revaluations of currency will add to market uncertainty coupled with uncertain currency exchange values. Accordingly, in the long run, everyone loses and no one wins.

C Gopinath Nair , Kochi



can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All must have a postal address and telephone number

First Published: Wed, May 01 2019. 22:41 IST
RECOMMENDED FOR YOU