Monday, November 21, 2011

The rational system

Some times pretty casual discussions can lead to critical solutions that can change the world. Recently one such discussion helped us to invent a solution  to many of the india's financial issues because of the external factors.

Primarily the imports are costing too much on Indians. Raising prices and the dollar (it is marching towards 54/56 rupees) eating most of the revenues most of the companies (some companies like IT companies, do get benefit out of this situation).

Back to the discussion, we were discussing about increased prices including petrol etc. Petrol became major in the discussion. we were discussing about pros and cons of Govt taking the load of the price fluctuations. It hurts all govt  development programs.

A better alternative is to identify the real users and then identify the per capita usage and provide the required commodities at limited units to the end user at subsidized price. Anything that is consumed on top of it should be at market price. I know our complex political system is very very slow and might never let this happen.

Simple benefit is that people will be cost conscious and may not waste fuel.  This might lead to reduced fuel use and might put pressure on the Oil producing countries and may cause ripple effects on the international crude prices. 

Yes the way India is consuming the fuels, it also provides a  greater power to control the pricing as well. We need to leverage and make decisions that doesn't affect the average user.

For me this looks a great idea but again our governments are more error prone in implementing any great idea and then stupid politics that play more vital role than the national actual interests.