Thursday, February 4, 2010

Possible Causes for Market pain...Are we enough capable for sustainable growth

Well, today we will discuss more about the possible causes and market pain.We will also conclude on our capability for sustainable growth.

Domestic liquefied petroleum gas (LPG) consumers may soon have to pay Rs 100 more for every 14.2-kg cylinder if the report of the expert group on ‘A viable and sustainable system of pricing of petroleum products' headed by Mr Kirit S. Parikh is accepted.

The committee has also suggested a Rs 6/litre increase in price for kerosene sold under the public distribution system (PDS), implying a 66 per cent jump over the current price.

Deregulation

The committee has also pressed for complete deregulation of petrol and diesel prices. Currently, domestic LPG in Delhi is sold at Rs 281.20/cylinder, petrol Rs 44.72 a litre, and diesel Rs 32.92. The price of kerosene, which has not been revised since 2002, is at Rs 9.23 a litre.

At the current international crude prices, freeing petrol would result in an increase of Rs 3 a litre and diesel Rs 3-4. The Indian crude basket for the current fiscal till February 2 has averaged at $68.54 a barrel.

When asked whether these radical recommendations would receive the political nod, Mr Murli Deora, Minister for Petroleum and Natural Gas, said, “We are very keen not just to discuss but see what best can be done both for the consumers as well as the Government.”

The Petroleum Ministry is hopeful of processing the report in a few days, and presenting it to the Government.

Bridging the gap

If the recommendations are accepted, it will bring the under-recoveries of public sector oil marketing companies on petrol and diesel down to nil.

To contain the under-recoveries on account of cooking fuels, the committee has suggested that the first step is to rationalise allocation of PDS kerosene across the States and increase prices of both kerosene and domestic LPG, according to the report.

The next remedy suggested in the report is to bridge the financial gap arising due to under recoveries on the two products.

This could be done by mopping up part of the incremental income of ONGC and Oil India Ltd from production from their nomination blocks (non-NELP) and cash subsidy from the Budget.

The formula has been suggested by ONGC, according to which, if international prices go up from $70 to $140 a barrel, the amount of subsidy from the Central Government on LPG and kerosene will remain stable at Rs 20,000 crore.

Speaking to newspersons after submitting the report, Mr Parikh said, “A viable long-term strategy for pricing major petroleum products is required.

“A viable policy has to be workable over a wide range of international oil prices and has to meet the various objectives of the Government. It should limit the fiscal burden on the Government and keep the domestic oil industry financially healthy and competitive.”


Inflation effect

On whether the suggestions made by the committee will have any impact on inflation, Mr Parikh said, “These measures have become essential because if we don't do it today, fiscal deficit will go up, credit ratings will be affected, the borrowing cost will go up. So, the economy will have to bear the burden one way or the other.” (Source: BL)


Are we capable to guide our economy in better way?
It's better you should think on this chapter.Isn't it? Solution is in the system itself.
It will take possibly another 6-8 month time frame to see market at new high (<20,000)
What parameters will drive market hence forth?
1. Inflation
2. Oil prices.
3. Company's result.
4. Govt policy for alternative energy and Act to make it happens.
5. Budget
6. Global cues
7. Stimulas packages for textiles, aviation.


My questions:

Are WE capable to control inflation? I am talking about our TOP BOSS/Our GOVT.
What is our base? Agriculture!!!! It's not far away that we will have to purchase food from foreiegn. It's shame Guys!!!
Are we enough educated? If yes, then why we don't we select a right candidate to drive our nation.