Economist Arvind Panagariya Advocates for Rising Petrol Prices Amid Oil Shortage
'Petrol Prices Should Be Allowed To Rise': Economist Arvind Panagariya On PM Modi's Forex Appeal
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Dr. Arvind Panagariya, Chairperson of the Finance Commission of India, advises the Indian government to allow petrol prices to rise to address oil shortages caused by geopolitical tensions. He supports Prime Minister Modi's appeal for fuel conservation but emphasizes the effectiveness of price instruments over bureaucratic restrictions.
- 01Dr. Arvind Panagariya recommends allowing petrol prices to rise as a solution to the oil shortage.
- 02He praises PM Modi's appeal for fuel conservation but prefers price instruments over bureaucratic measures.
- 03Panagariya suggests a depreciation of the rupee to discourage imports and improve the current account balance.
- 04He highlights that the US is also experiencing an oil price surge due to global market dynamics.
- 05The economist expresses optimism about the potential resolution of the US-Iran conflict affecting oil supplies.
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Dr. Arvind Panagariya, a prominent economist and Chairperson of the Finance Commission of India, has advised the Indian government to allow petrol prices to rise in response to the ongoing oil shortage linked to geopolitical tensions, particularly the blockade of the Strait of Hormuz. In an interview with NDTV, he emphasized the importance of using price instruments to manage shortages rather than implementing bureaucratic restrictions. He commended Prime Minister Narendra Modi's recent appeal to the public to conserve fuel through public transport and carpooling, viewing it as a wise initial measure. However, Panagariya believes that allowing petrol prices to adjust naturally would be more effective. He also suggested that a depreciation of the Indian rupee could help reduce import costs across the board, thereby improving the current account balance. Additionally, he noted that the United States is facing similar oil price increases, with gasoline prices rising from approximately $4 to nearly $6 per gallon, reflecting the interconnected nature of global oil markets. Panagariya remains optimistic about the potential for the US government to resolve the ongoing conflict in the Middle East, which is contributing to these oil supply issues.
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Allowing petrol prices to rise could lead to higher fuel costs for consumers in India, affecting transportation expenses and overall cost of living.
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