Cash lower-oil-prices...

Today the RBI surprised everybody, from the corners of Industry to the corridors of the politics... The sudden rate cut from our Governor, on an off-date of the official-review, is also a signal of a pro-business, pro-growth mindset of the RBI chief which was first manifested in his avtar as Chief-Economic-Advisors in the last government, before... In short, a signal that he (Rajan) is not against the government agenda... His flexibility also shows that he will go a long-way with the government in fulfilling its objectives... I’m sure Narendra Modi has a very good plan to take INDIA to the “original-position”...  Nonetheless, the real cause of so much confidence in the inflation glide-path of the economy (beside Modi) is so much dramatic fall in the oil-prices after the exploration of Shale (a kind of fuel) in the US which is a major contributor to the downfall of the Oil-Empire and as more wells will be found all over the world prices are further likely to go down... It has also other reasons like that cost for oil-producing countries are much below its market price and they will converge to their true-value, close to its cost, because more and more investment will flow to earn margins... So, as more players will enter-market price competition will follow... Even now we have countries like Venezuela and Argentina who have their cost high, as compared to the Middle-East, are facing current-account losses... mainly exporters, importers as well-off because of their current-account gain... and it likely to continue for a longer-time... INDIA is among its beneficiaries, it is mainly an importer... Nevertheless, oil directly contributes to the transport-cost and a 50% fall in the oil-prices should bring in 50% relief in the household fuel-budget... It will atleast put Rs 1000-1500 extra which could be spent any where... In addition prices of other articles will also come in line, more money in our consumers’ hands, and ultimately more demand and growth... It is going to reduce prices all-over... Times is right for the government to target-subsidies better and pass on the fullest benefit of the global fall in the crude-prices to the public... We have a very-good paper by Paul Krugman on Economic Geography and Increasing Returns which concludes that lower transport prices help reduce prices and prosper industries within a geographical-region... Lower transport-costs are very good for expansion of demand and growth... Once more, thumbs-up to the Indian policy-making...