[Oil] Prices and Growth...

Oil prices for India are supply side problem... Controlling demand through higher prices is only a short run aid... When lower oil prices could also help consumer in the short run... And, try to improve supply in the long run...

INDIA is also an exporter of oil to an extent... And, second highest exports from the country... Export tariffs might increase domestic supply and lower the price level...

It could also help maintain the fiscal deficit... Tariffs would increase the government revenue...

True, sanctions on countries like Venezuela and Iran and supply cut by oil producing countries have resulted in higher oil prices... which could come down as the conflicts resolve and the oil producing countries resume supply... Oil importing countries must raise voice against supply cut and monopoly of oil producing countries to boost oil prices and profits...

The Government, including States (INDIA), is getting 50% tax on the oil prices which could be easily brought down 10% to around 35-40% which is likely to bring inflation down and might appreciate the exchange rate and also reduce inflation and interest rate and expectations.... Lower spending by the government would be replaced by consumer spending without sacrificing or lowering the growth rate... Lower inflation could also increase competitiveness of Indian exports.... Lower interest rate would also increase private spending... Lower oil prices and inflation and interest rate and expectations could increase growth... Strong exchange rate could also increase foreign capital inflow... Lower oil prices could be reinforcing lower prices if the economy is below full employment due to higher demand and supply and production and investment and employment and growth and expectations.....

Population growth rate decides the potential growth or growth rate of an economy... To increase growth it (the US) must increase its labour or workforce by more immigration of labour or skilled labour which means less protectionism and open flow of people and products... Lower inflation and lower interest rates to achieve full employment would help domestic employment and production and growth.... Or the US may try to increase productivity by innovation by increasing research and skills of its labourforce... which may not happen at once or could take time.....

As long as unemployment is there we could not expect inflation b'coz higher money supply would increase demand and supply, both, and could contain prices or inflation... Nonetheless, lower prices suggest that supply has surpassed demand and more easing would further lower price and price expectations as long as there is unemployment because production and supply would increase... Lower prices and price expectations could delay spending which could reinforce lower prices as long as there is unemployment in the economy... Faster employment creation could increase the pace of recovery and after full employment prices might increase... If money supply is fixed it would help stabilize price and price expectations which might help increase spending... If people expect neither higher nor lower prices they would stop expecting or speculating anything and might resume spending which could lower unemployment and increase price and price expectations after full employment.....