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Inflation in India is indeed a complex subject. Interest rate hike (or cuts) alone are not the solution to tackle inflation.

As usual Mr Sibal, you are wrong!

As a loyal foot soldier Sibal continues to defend the indefensible.

"If that logic were right, then it is true of giving away any public asset at a lower price or an institutional price or for free. Whether it is land for a hospital, land for a school, air waves for the telecom sector." That was Kapil Sibal articulating his point in (mock?) seriousness in a chat show. And the logic referred to at the outset? It was obviously about auctioning coal blocks.

Skewed policies to blame for diesel hike

The weighted average price of Indian crude imports was approximately US$ 22 a barrel in 2001-02. A decade later in 2011-12 this was well in excess of US$ 110 – a 400% increase!

Put differently, the US$ had significantly depreciated against crude oil – a fact that is lost on most debating the diesel price rise.

That is not all. The Rupee was approximately Rs 48 to a US$ in 2001-02. Over the decade it has depreciated by close to 12%. Put pithily, the Indian consumer faces a double whammy when it comes to the diesel price increase – a massive depreciation of the US$ against crude oil and on top of it, a depreciation of the Rupee against the Dollar. Hence, in Rupee terms crude has increased close to 500% in the past decade.

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