How to prepare for US$100 oil?
The Financial Express A spike in prices near the next general elections could test the building up of fiscal buffers An important point that Ruchir Sharma makes in his new book, The Rise and Fall of Nations is: don’t ask what the world would look like if the current trends hold; ask what happens if the normal pattern holds and cycles continue to turn every five years or so. It is anybody’s call whether oil at $100 per barrel was a short-term ‘current trend’ or a long-term normal. Be that as it may, it would pay to build out a scenario of oil going back to $100 per barrel to see how India’s current account could look. This will help (1) stress-test the strengths of the Indian current account in dealing with such a situation and (2) detail the policy imperatives that should act as a guide in an uncertain world. Given the importance and magnitude of energy imports into India, the country has been surprised significantly—both on the upside and the downside—due to gyrating energy pr