Banker Uday Kotak warned on Tuesday – ‘A big shock is coming… be prepared for difficult times.’ Two days before this, PM Modi had also said – Don’t buy gold for 1 year and reduce petrol-diesel consumption. So is a major crisis coming? If yes, what is the government doing and how should you prepare? Today’s explainer discusses this… What are the signs of crisis? There are 3 major points: 1. Prime Minister’s 7 appeals On May 10, at a rally in Secunderabad, Telangana, he said – Corona was the biggest crisis of the century, so the situation created by the America-Iran war is one of the major crises of this decade. To deal with this, he made 7 appeals to the countrymen. Shortly after, BJP also released this poster on social platforms- The West Asian war started on February 27. The government kept saying everything is fine. But after two and a half months, the Prime Minister is appealing to everyone. 2. Finance Ministry said – ‘Cannot avoid the burden of expensive oil’ 3. Suddenly increasing import duty on gold and silver What will that crisis be after all? In the current situation, there are 3 things that will create crisis for people 1. Petrol-Diesel may become expensive by up to 17 rupees The net worth of these three companies is currently 3.48 lakh crore rupees. If this loss continues, then in just two more quarters, i.e., 6 months, their net worth could become zero. In simple words, the companies will become bankrupt on paper. That’s why there is talk of petrol-diesel rates increasing. Now the question arises, how much? A rough calculation suggests that companies need to increase petrol by 16 rupees and diesel by 17 rupees to cover their losses. See the calculation in the graphic below- In the last two months, due to rising crude oil prices, prices have been increased in more than 120 countries. 44% in Pakistan, 42% in America, and 31% in China. 2. A 1% increase in inflation rate can increase your monthly budget by 15% Economists believe that a 15% increase in fuel prices leads to a direct 1% increase in the wholesale inflation rate. This could rise from the current 3.7% to 4.7%. This sounds like just a number, but in real life, its effects are quite profound. Suppose the prices of petrol-diesel increase by ?15 per litre, then a middle class family’s budget will be disrupted something like this- Apart from this, there will be a job crisis for people working in the transportation sector. According to Shailendra Gupta, member of the transporter association organization ‘All Indian Motor Transport Congress’, 10% of vehicles are already not running due to the petrol-diesel crisis. If oil prices increase, 30% of vehicles will not be able to run. 3. Need for 39 million tons of fertilizer in June-July, only half in stock What preparations does the government have to deal with this crisis? The government claims that it has stocked necessary oil, gas and fertilizer… 60 days of crude oil stock available: India has a capacity to store 5.53 million metric tons (MMT) of crude oil in storage plants at Visakhapatnam, Mangaluru and Padur. Currently, 64% of this capacity, approximately 3.37 MMT of crude oil, is filled. According to Hardeep Puri, India has a stock of crude oil for 60 days. LPG production increased by one and a half times: India has increased LPG production in its total 23 gas-oil refineries including Jamnagar, Panipat, Mathura and Guwahati. According to Puri, ‘Earlier our domestic LPG production was 35 to 36 thousand metric tons per day, which we have increased to 50 to 54 thousand metric tons.’ Fertilizer stock higher than normal days: According to Aparna Sharma, Additional Secretary of the Fertilizer Department, ‘Urea plants are running at full capacity and production of phosphate and potash fertilizers has also been increased. Currently the government has 51% stock, whereas usually only 33% stock is available at this time. More than 1.70 lakh crore rupees have been allocated in the budget for fertilizer subsidy, so that even if fertilizer prices increase, the burden on farmers does not increase.’ Apart from this, even during war situations in the world, the real strength of India’s economy lies in its domestic demand. About 70% of the country’s GDP comes from domestic consumption, which reduces the impact of external pressures on the economy. Experts have indicated the possibility of India’s GDP growth declining from 7.7% to 6.7% due to the war, yet this will be faster growth compared to most countries. According to tax and audit firm ‘Deloitte’, India has focused on its biggest strength – domestic demand, which has kept inflation under control and boosted consumption. What can you do to avoid the impact of this crisis? Increasing or decreasing the prices of essential items like petrol-diesel, LPG, cooking oil and fertilizer is in the hands of the government. You can definitely prepare to reduce its impact on you. Financial Planner Swati Kumari explains- Increase Emergency Fund: More savings provide security during emergency expenses and inflation. If you currently have 5 lakh rupees in your emergency fund, then increase it to between 7-8 lakhs. For example, if a family’s monthly expenditure is 50 thousand, then they should create an emergency fund of at least 3 lakh rupees. Stop Big Expenses: If expenses increase and income doesn’t increase, it will directly impact your pocket. In such a situation, if you want to upgrade your car or plan a foreign trip, then postpone it for at least one year. Increase Health Insurance Cover: In times of crisis, if a health emergency arises, with reduced savings and increased medical expenses, you would want to withdraw money from your FD or other investments, which would not be the right decision. In such a situation, if possible, increase your health insurance cover. Increase Investment in These Sectors: During COVID times, shares of sectors like pharma and IT had increased. In the current crisis too, some sectors can give profits. If you have extra money, you can invest in sectors like renewable energy, EV and railways. ————– Research Support – Prathamesh Vyas ————–
Emphasize accuracy and depth.