The Oil Minister of India has announced that the prices of fuel will reduce. The fuel retailers will be allowed to reduce their prices with five rupees or 10 US cent for a litre petrol and two cents for a litre diesel. With this drop, the government hopes to stimulate the economy in this global credit crisis.
For India, it's his first drop in 22 months of high prices. Price drop is also good for the government because now they could probably achieve their economic stimulus plan.Some economist say that the reducing prices also can be combined with a short-term cut of the interest rate but only for the weekend. With this move, the economist hope that people will put money on their bank or that they will buy more.
I think that the price dorp of India will give their economy a boost.The people of India will now have more money because they don't have to spend a lot of money anymore for fuel and with that money they buy more or put it on a deposit account. But I don't think that the cut of the short-term interest rate during the weekend will boost their economy, I think that it's a to short period for people to decide whether they will put their money on the bank or not.
So generally I think that India can boost their economy by dropping the price of fuel and the short-term interest rate, but they have to exist for a long time.
For India, it's his first drop in 22 months of high prices. Price drop is also good for the government because now they could probably achieve their economic stimulus plan.Some economist say that the reducing prices also can be combined with a short-term cut of the interest rate but only for the weekend. With this move, the economist hope that people will put money on their bank or that they will buy more.
I think that the price dorp of India will give their economy a boost.The people of India will now have more money because they don't have to spend a lot of money anymore for fuel and with that money they buy more or put it on a deposit account. But I don't think that the cut of the short-term interest rate during the weekend will boost their economy, I think that it's a to short period for people to decide whether they will put their money on the bank or not.
So generally I think that India can boost their economy by dropping the price of fuel and the short-term interest rate, but they have to exist for a long time.
1 comment:
I think that India understands the crisis they are in, and by reducing the petrol and diesel prices, they help their inhabitants. But I think it isn't enough, the interest rate cut will be more appreciated, I think. But I agree with you that the period is very short, but a short-term interest cut is better then no interest cut. So I think it's a positive boost that the Indian government is trying to give their economy.
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