TOPIC: Indian Economy and issues relating to planning, mobilization of resources, growth, development
4) Discuss the impact that fluctuations in oil prices have on economy. Also, suggest steps on how should India prepare itself to deal with fluctuations in oil prices?(250 words)
Why this question
The Goldilocks phase of Indian economy is under threat on account of rising oil prices. This is a frequent challenge that indian economy has to deal with. Understanding the impact of rising oil prices on indian economy and thinking of steps to deal with this recurring challenge is of utmost importance.
Key demand of the question
Following aspects are to be highlighted in your answer
- The current situation with respect to oil prices along with a brief history of the prices
- The impact of the fluctuations in oil price on indian economy – highlight the impact both when prices are low and high
- Mention that price in the future is destined to rise because of so and so reasons
- Steps to deal with such a situation
Directive word
Discuss – Here discuss demands you to detail out the impact that changes in oil price bring on the economy – both the positive and the negative impact along with establishing that this is a recurring feature of Indian economy.
Suggest measures – Here measures to deal with fluctuations in oil prices are to be highlighted
Structure of the answer
Introduction – Mention that indian economy has been passing through a Goldilocks phase largely on account of the low level of oil prices. The situation is about to change which requires us to understand the impact and stay prepared
Body
- The current situation with respect to oil prices along with a brief history of the prices to establish that the problem has been a recurring one for Indian economy
- Bring out the impact of fluctuations in oil prices – the impact of low oil prices as experienced by the economy so far and the impact of high prices. Discuss the impact on inflation, balance of payment, exchange rate, fuel subsidy bill etc
- Mention that price in the future is destined to rise because of so and so reasons to emphasize that preparation is required
- Suggest steps to be taken to deal with fluctuating oil prices
Conclusion – Mention the critical need of staying prepared and seeing this as an opportunity to use more renewables etc
