All about elections.

"A widening conflict in the Middle East could trigger a fresh wave of global inflation if it spreads across supply chains, asset classes and jurisdictions, though India may remain relatively isolated, according to a report by SBI Research." ET. Very reassuring. India is very dependent on remittances from its diaspora who sent $135.4 billion in FY 2025 (pib.gov.in), 38% of which is from Gulf countries. "The cost of crude for Indian refiners has soared 93% since the conflict in the Gulf broke on 28 Feb. and hit $136.56 a barrel a week ago. TOI. Just one month ago, in January, the cost of India's basket of crude fell to $59.92 per barrel from $62.2 in December. Mint. It is not just a question of rising commodity prices, but also the exchange rate of the rupee against the US dollar which determines what we pay for retail fuel. The rupee has plunged from 90.894 to one dollar on 25 Feb. to 93.93 this morning. investing.com. What can the government do? The price of premium petrol has been increased by Rs 2.09-Rs 2.35 per liter by the oil market companies, while "Indian oil Corp Ltd has has raised the price of its industrial fuel by nearly Rs 22, or 25%, to Rs 109.59 from Rs 87.67 per liter. MC. Taking advantage of low prices since 2015, except for a brief spike in 2008  (eia. gov) the government has raked in over Rs 40 trillion from high taxes on retail fuel (ppac.gov.in). Lowering the rate of taxes on fuel will cause a serious shortfall in revenue and raising prices will immediately raise transport cost and increase prices. Assembly elections are to be held shortly in Kerala, Tamil Nadu and West Bengal, states ruled by non-BJP parties (wikipedia), and which Mr Narendra Modi would like to take over to make India a one-party autocracy. Prices will not be increased till elections are over. On the other hand, with India's oil imports at over $136 per barrel and the rupee in free fall, keeping the retail price at the same level will mean almost zero tax collection and cause a serious hole in revenue. In the assembly election in Bihar in November 2025, Mr Modi's party the BJP won the largest number of seats with 89 seats (ECI), after Mr Modi distributed Rs 10,000 each to 7.5 million women at a cost of Rs 75 billion to the taxpayer (TOI). The 16th Finance Commission found that "The Union government spent Rs 6.33 trillion on subsidies and transfers in 2023-24," while unconditional transfers by states are projected to reach Rs 4.14 trillion in 2025-26. There are dozens of other schemes including pensions, loan waivers and free electricity. Total debt of power distribution companies has reached Rs 7.42 trillion, wrote Aditya Sinha. No wonder, yields on the benchmark 10-year government bonds have jumped to 6.830 this morning from 6.661 on 27 February  (investing.com), significantly increasing borrowing costs for the government. Despite, "The Reserve Bank of India net bought bonds worth Rs 195.30 billion ($2.1) in the week ended March 13, against a record Rs 572.10 billion for the week to March 6." ET. It may seem that good times will last forever. But winning elections at any cost is highly immoral. Will Mr Modi have to pay? We really, really hope so.