Fuel price and interest rate hikes a Political Math....

On the one hand RBI is increasing the interest rates to make money costly which will tame demand and hence reduce inflation. And once the inflation tames Govt increases fuel prices.

The result of the two actions is as below

Interest Rate Hike By RBI to tame inflation	Fuel Price Hike by Govt in the name of deregulation
Results in increase in interest rates which leads to increased cost of borrowing, increased Home loan EMIs.	Results in shooting up of transportation costs making travelling by private vehicles dearer and increase in Rickshaw and Taxi fares as many of them still run on Petrol.
Result – 1.Reduced inflation, reduced cost of food and other daily necessities. 2. More outflow of salary per month to pay loans. Reduced food prices, but increased EMI amt.	Result – Costly Private and Public transport again draws a big hole in Common Man’s pocket, who even if does not have a private vehicle, has to suffer from increase in fuel rates due to increase in fares.

If the price of petrol stands at Rs 58.90, the break up of cost as calculated by the Indian Government is as follows - (Current break up is not available)

Basic Price: Rs 28.93

Education Tax: Rs 0.43

Dealer commission: Rs 1.05

Excise duty: Rs 14.35

VAT: Rs 5.5

Petrol Custom: Rs 1.54

Crude Oil Custom duty: Rs 1.1

Transportation Charge: Rs 6.00

Total price: Rs 58.90

Suggestion to government – I think govt should stop looting its citizens in the name of taming inflation. Instead of increasing the fuel and interest rates, govt can save a lot of money just by reducing electricity theft by 50% and reducing corruption by only 10% if possible and it is a simple logic which can be understood by a common man and we do not need any ECONOMIST to understand it!

- By Chintan Dedhia

Disclaimer - It is just a personal thought and the expression of the same by a mere analysis on the economic events It is not intended to hurt any person or institution .Any body having any queries please mail me at chintan.no1@gmail.com