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Correspondent

21 August 2024 at 10:20:16 am

Fuel Shock

The latest increase in petrol and diesel prices — the fourth hike in just 11 days — underlines how vulnerable India remains to geopolitical turmoil and its own unfinished reforms in the energy sector. Brent crude surged again after fresh American military strikes in southern Iran deepened fears of the renewal of the Iran conflict on a higher scale. Markets are now gripped by uncertainty as hopes of a negotiated settlement continue to fade. For a country like India, which imports more than 80...

Fuel Shock

The latest increase in petrol and diesel prices — the fourth hike in just 11 days — underlines how vulnerable India remains to geopolitical turmoil and its own unfinished reforms in the energy sector. Brent crude surged again after fresh American military strikes in southern Iran deepened fears of the renewal of the Iran conflict on a higher scale. Markets are now gripped by uncertainty as hopes of a negotiated settlement continue to fade. For a country like India, which imports more than 80 percent of its crude oil requirements, every geopolitical tremor in the Gulf quickly translates into pain at the fuel pump. Since May 15, petrol and diesel prices have risen cumulatively by nearly Rs. 7.5 per litre. In Hyderabad and Thiruvananthapuram, petrol has crossed Rs. 115 a litre. Mumbai, Kolkata, Bengaluru and Chennai are all witnessing sharp increases. Even Delhi, traditionally cushioned by relatively lower taxes, has seen petrol move beyond Rs. 102 per litre. This marks a significant shift after nearly four years of relative stability in retail fuel prices. For long periods, state-run oil marketing companies absorbed the burden of elevated crude prices, shrinking refining margins and a weakening rupee. Political considerations, particularly around elections, often delayed price revisions. The Rs. 2 per litre reduction announced ahead of the 2024 national elections was a reminder that fuel pricing in India has never been entirely divorced from politics. But oil companies cannot indefinitely absorb mounting losses, especially when global crude prices remain elevated. The Centre has already cut excise duties, with Finance Minister Nirmala Sitharaman estimating the revenue sacrifice at nearly Rs. 1 lakh crore. That fiscal cushion has now largely been exhausted. The spotlight is therefore shifting towards states. VAT on fuel remains one of the most lucrative revenue streams for state governments, with some states imposing levies exceeding 30 percent through taxes and cess components. This explains why states such as Telangana, Kerala and West Bengal continue to record some of the highest retail fuel prices in the country. The Centre is now subtly nudging states to reduce VAT rates to soften the blow on consumers. Yet states are reluctant. Their dependence on fuel taxes is structural, not incidental. Apart from excise on liquor, few revenue sources offer such steady and politically manageable returns. Bringing petrol and diesel under the GST framework continues to face bipartisan resistance from states fearful of losing fiscal autonomy. Rising fuel prices do not remain confined to petrol stations. They seep into every layer of the economy as transportation costs rise, food inflation accelerates and household budgets shrink. Small businesses, already coping with weak consumption and high borrowing costs, are facing renewed pressure. India’s recurring vulnerability to crude oil shocks exposes the limits of its energy security architecture. Expansion of strategic petroleum reserves and greater investment in renewable energy can no longer remain aspirational talking points. They must become urgent national priorities.

What Does Trump 2.0 Cabinet Look Like?

  • AP
  • Nov 29, 2024
  • 3 min read
Trump

Donald Trump's personnel choices for his new Cabinet and White House reflect his signature positions on immigration and trade but also a range of viewpoints and backgrounds that raise questions about what ideological anchors might guide his Oval Office encore.


With a rapid assembly of his second administration — faster than his effort eight years ago — the former and incoming president has combined television personalities, former Democrats, a wrestling executive and traditional elected Republicans into a mix that makes clear his intentions to impose tariffs on imported goods and crack down on illegal immigration but leaves open a range of possibilities on other policy pursuits.


“The president has his two big priorities and doesn't feel as strongly about anything else — so it's going to be a real jump ball and zigzag,” predicted Marc Short, chief of staff to Vice President Mike Pence during Trump's 2017-21 term. “In the first administration, he surrounded himself with more conservative thinkers, and the results showed we were mostly rowing in the same direction. This is more eclectic.”


Indeed, Secretary of State-designee Marco Rubio, the Florida senator who has pilloried authoritarian regimes around the world, is in line to serve as top diplomat to a president who praises autocratic leaders like Russia's Vladimir Putin and Hungary's Viktor Orban.


Republican Rep. Lori Chavez-DeRemer of Oregon has been tapped to sit at the Cabinet table as a pro-union labor secretary alongside multiple billionaires, former governors and others who oppose making it easier for workers to organise themselves.


The prospective treasury secretary, Scott Bessent, wants to cut deficits for a president who promised more tax cuts, better veterans services and no rollbacks of the largest federal outlays: Social Security, Medicare and national defense.


Abortion-rights supporter Robert F. Kennedy Jr. is Trump's choice to lead the Health and Human Services Department, which Trump's conservative Christian base has long targeted as an agency where the anti-abortion movement must wield more influence.


Former Republican House Speaker Newt Gingrich allowed that members of Trump's slate will not always agree with the president and certainly not with one another. But he minimized the potential for irreconcilable differences: “A strong Cabinet, by definition, means you're going to have people with different opinions and different skills.”


That kind of unpredictability is at the core of Trump's political identity. He is the erstwhile reality TV star who already upended Washington once and is returning to power with sweeping, sometimes contradictory promises that convinced voters, especially those in the working class, that he will do it all again.


“What Donald Trump has done is reorient political leadership and activism to a more entrepreneurial spirit,” Gingrich said.


There's also plenty of room for conflict, given the breadth of Trump's 2024 campaign promises and his pattern of cycling through Cabinet members and national security personnel during his first term.


This time, Trump has pledged to impose tariffs on foreign goods, end illegal immigration and launch a mass deportation force, goose U.S. energy production and exact retribution on people who opposed — and prosecuted — him. He's added promises to cut taxes, raise wages, end wars in Israel and Ukraine, streamline government, protect Social Security and Medicare, help veterans and squelch cultural progressivism.


Trump alluded to some of those promises in recent weeks as he completed his proposed roster of federal department heads and named top White House staff members. But his announcements skimmed over any policy paradoxes or potential complications.


Bessent has crusaded as a deficit hawk, warning that the ballooning national debt, paired with higher interest rates, drives consumer inflation. But he also supports extending Trump's 2017 tax cuts that added to the overall debt and annual debt service payments to investors who buy Treasury notes.


A hedge-fund billionaire, Bessent built his wealth in world markets. Yet, generally speaking, he's endorsed Trump's tariffs. He rejects the idea that they feed inflation and instead frames tariffs as one-time price adjustments and leverage to achieve U.S. foreign policy and domestic economic aims.


Trump, for his part, declared that Bessent would “help me usher in a new Golden Age for the United States.”


Chavez-DeRemer, Trump promised, “will achieve historic cooperation between Business and Labor that will restore the American Dream for Working Families.”


Trump did not address the Oregon congresswoman's staunch support for the PRO-Act, a Democratic-backed measure that would make it easier for workers to unionize, among other provisions. That proposal passed the House when Democrats held a majority. But it's never had measurable Republican support in either chamber on Capitol Hill, and Trump has never made it part of his agenda.


When Trump named Kennedy as his pick for health secretary, he did not mention the former Democrat's support for abortion rights. Instead, Trump put the focus on Kennedy's intention to take on the U.S. agriculture, food processing and drug manufacturing sectors.

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