Rubber seal Manufacturers regime

　　Tehran: US President Donald Trump is the "main culprit" to blame for a recent surge in oil prices, Iranian Oil Minister Bijan Namdar Zanganeh said on Wednesday."The main culprit of the price hikes... and the destabilisation of the market is Trump and his disruptive and illegal policies," Zanganeh said on state television, after the US president hit out at OPEC accusing it of "ripping off the rest of the world"."Trump both tries to decrease Irans oil exports significantly and also wants prices not to go up. These two cant happen together," Zanganeh said, alluding to US sanctions on Irans oil sales set to take effect in November.Trump withdrew the United States from the 2015 nuclear deal between Iran and world powers in May, and his administration imposed a round of sanctions on the Islamic republic in August.Zanganeh said if Trump wants prices to ease then he has to "stop his unwarranted interference... in the Middle East and not prevent Irans production and exports"."Its interesting that Macron also explicitly pointed to this," Zanganeh said, referring to Idea by French President Emmanuel Macron on Tuesday.Speaking to reporters after addressing the UN General Assembly, Macron said Iran should be allowed to keep selling oil and called for dialogue as he rejected a US push to isolate the clerical rubber seal Manufacturers regime."It would be good for the price of oil for Iran to be able to sell it," the French leader said. "Its good for peace and its good for the shape of the inteational price of oil."

　　Oil prices are once again on a roll after ruling far below the peak it reached in 2011-2012 giving an opportunity to a world badgered by the financial crisis to readjust its economies into stability if not on a sustained growth path. India used this window of opportunity to engage in a monumental exercise of demonetisation and introducing the Goods and Services tax for the country as a whole. Economists would agree that if a country had to make any paradigm changes in taxation system it should avail itself of that opportunity when it had not to struggle with exteal shocks or inteal instability and stress. On this matter India chose wisely. It is struggling with the various issues pertaining to the GST. With petrol and diesel being outside the scope of the GST, the continuous rise in oil prices has put it in an awkward situation of having to raise the price of both on a market determined basis.It cannot go back to a regime of administered prices having given it up progressively with an avowed policy of reducing the fiscal deficit and closing the revenue deficit gap.

　　The author dealt with the SEA crisis of 1997 as a member of the Board of the IMF and has witnessed how reserves depleted in hours even of a country like South Korea, which was an export surplus country, so were Thailand and Indonesia. Can India withstand an exteal default shock by any company of India that fails to discharge its obligations? Is anyone in the Finance Ministry or RBI even looking at this danger with any seriousness is not clear.Ill informed and emotionally charged politicians call for reduction in the price of diesel and petrol. Considered rationally from a national perspective it would be disastrous for the country to reduce taxes on them for more than one reason. In the entire EU and even in the US the basic price of diesel and petrol is less than 50% of what it is sold at the retail outlets. In the case of the EU countries taxes account for about 50%. If taxes are reduced in India only the well off get the immediate benefit but the country cannot afford to lose tax revenue or be in position to pay for the imports at increasing price of crude oil.