Economic pandemic disruptions and Commodities Price Risk Mechanism

Price Risk Management fund is an important economic concept especially in emerging economies like India.

Commodity Price fluctuations especially in Oil, Rubber etc. impact the allocation of resources in countries like India. The volatility in the prices of such commodities in the international markets affect the prices in India.When the gyrations of price of movements are carried into the economy there will be steep fall and rise in the local prices, which affect the consumers by distorting their incomes.This in turn affect the allocation of resources over the medium term and long term as depressed prices drive out further investments in Oil etc and inflated prices bring in increased investments which may become unviable after some time.

Inorder to buffer the violent fluctuations in the prices when the international prices are high govt collects Price Risk Management levy from local producers and keep it in a separate kitty and then when international prices are low give the money out of it to local producers inorder to compensate them for low prices in the market.But the tricky question is when to start this levy . For this many theories abound and my simple take is to take a medium term view of 6 months to 3 years of the prices. When prices are below or above the median line, we should start this.

So now the levy of additional excise on petrol and diesel should be collected and used as Price risk management fund and not for immediate use for fighting Covid 19 despite huge temptations to do that.

We already have such a fund for all other commodities also -Rubber ,Cotton etc.

Comments

Why Indian Rupee is falling steeply against US dollar?

The Indian Rupee recently crossed the 97 mark against the US Dollar, and it doesn't seem to be slowing down. If you've been tracking exchange rates or planning a trip abroad, you've probably felt the pinch. Everything from imported electronics to cooking oil is getting more expensive. And your money just doesn't stretch as far as it used to. This isn't a one-day blip. The rupee has been on a steady downward slide for months, and the reasons go deeper than most headlines suggest. It's a mix of what's happening inside India's economy and what's happening across the globe. Trade deficits, foreign investors pulling out money, rising oil prices, the US Federal Reserve keeping interest rates high — all of these are pulling the rupee in the wrong direction at the same time. In this post, we'll break down the key domestic pressures weighing on the rupee and the global forces making the US Dollar stronger. We'll also look at what the Reserve Bank ...

India's Semiconductor play-now only semi-final!

India's Semiconductor Manufacturing in 2026–2030: PLI Impact, Global Standing, and AI-Era Policy Needs How India's PLI scheme is building semiconductor capacity, what it means for global supply chains, and what government must do next as AI demand reshapes the industry. 14 min read Modern semiconductor fab with Indian innovation flags and growth trajectory Semiconductors-Policy in India India's PLI scheme commits $10 billion to build semiconductor manufacturing capacity over 5 years, with TATA and Micron fab projects expected to deliver 1–2 million wafers monthly by 2027. By 2030, India could claim 2–3% of global semiconductor production - a major jump from today's <1%, though still far behind Taiwan and South Korea. Geopolitically, this matters: as supply chains de-risk away from Taiwan and China, India becomes a critical third hub for mature-node and memory-chip manufacturing. However, success hinges on three critical gaps the government must address. First...

Hanuman and Ganesha!

The two major loved deities of the Hindu pantheon are Hanuman and Ganesha. Let us dwell into the concepts and significance of these two dieties. Ganesha, the son of Parvati and Shiv, is worshipped first before starting any new job or work. Even if you want to start writing or reading , you invoke the blessings of Lord Ganesha who goes under various names- Ganapathi, Vigneshwar, Vinayak, and Pillayar in Tamilnadu. Ganesha Gayathri, Pancharatnam are some of the important Ganesha mantras and hymns. Adi Ganesha idol is in a Temple near Tiruvarur in Tamilnadu with a human face.The mythological story says that Shiv slew His head and then fixed the head of the animal that He saw first after this beheading of His son. Ganesha after that with the elephant head is worshipped as the wisdom god by Hindus. Why only Hindus. He is worshipped in Indonesia where He finds Himself in their currency notes. He is considered the destroyer of evil in Japan. In Mexico, Ganesha idols were said to h...

We are what we are !!

Search This Blog