(MENAFN- Khaleej Times) Former Indian ministers voice concern at Asian Business Leadership Forum
Falling oil prices and declining commodity costs have failed to benefit common Indians – despite a windfall of positive economic indicators for policy-makers. The comments were made by former Indian Minister of Trade and Commerce Kamal Nath on the sidelines of the Asian Business Leadership Forum (ABLF) hosted in Dubai on Sunday.
Speaking with Khaleej Times Kamal Nath said: “The reduction in (global) oil prices has not been passed on to consumers. In fact the government has become a big beneficiary because they have increased duties on oil. All the benefits of revenues instead of going to people who could have had more money in their pockets is now ending up with the government.”
India imports almost 80 per cent of its oil and benefits from lower oil prices – helping tame inflation and allowing a reduction of the trade deficit. Reiterating the previous government’s decision to move away from pegged oil prices the former minister said: “When we freed ourselves (India) from the pegged oil prices we said the benefit and pitfalls of oil price volatility would be borne by the consumer – we would have followed that policy.”
Echoing similar sentiments India’s former finance minister P. Chidambaram noted the current oil prices were not sustainable. Calling the decline in oil prices an ‘unmixed blessing’ he said the declining oil prices could have a domino effect on investments in developed economies too.
“It will hurt investment and if the investment doesn’t take place today it is going to boomerang seven or eight years down the line” said Chidambaram.
The former minister also criticised western economic models for promoting vast inequality of wealth as he said: “Inequality is a grave danger for countries with large population where millions of people live their whole life in poverty. Making strong political choices will be imperative for governments. We need to invent our own models where abject poverty can be eliminated to reduce not just economic inequality – but inequality of access to education healthcare and many other things of life.”
The oil price decline comes at a time when India is positioning itself to benefit from strong fiscal and structural measures in recent years. However the road ahead may not be an easy one for policy-makers.
“In terms of economic forecasting 2015 is likely to be a difficult year. I don’t see light at the end of the tunnel as we sit here today. Unless Europe – which is a big engine of growth and Japan pick up growth global growth will continue to remain subdued” added the former minister.
Often dubbed as the ‘Davos of Asia’ the ABLF platform celebrates Asian excellence in industry infrastructure and energy. Leaders from both public and private sectors voiced their views on opportunities and challenges at the two-day event hosted in Dubai.
muazkhaleejtimes.com