The major reason for inflation is the hike in fuel and food prices. Demand for fuel is growing by the day. The more oil is extracted from the earth's crust the more demand grows. The greed for energy is now leaving many oil wells dry. Old wells don't bear oil and new wells are hard to find. Even if new oil reserves are found, they are in challenging locations. Saudi Arabia plans to extract more oil to meet the demand. But this will take at least a few years. Till then, don't be surprised to see oil prices going up each day.In this situation, the last thing India needs is Tata's Nano. The one lakh car is easily affordable to any middle class family with a decent income. Gone are the days when cars were for the affluent. With the induction of Nano in the showrooms, the number of cars on the Indian streets is sure to rise. More cars easily means more pollution and global warming (as if we bother about it) and more fuel consumption. Easily, increased consumption means increased demand and hence, even higher prices. This again means, higher inflation and increase in lending rates by RBI. And the cycle continues!
The least we can do is pledge to buy only expensive cars. Wait till you have saved enough for it and get your money's worth. Till then, we always have the public transportation.
