BENGALURU: This month has seen the steepest fall of gold and oil prices for a long time. Rain gods have been kind as gloomy monsoon forecasts have proved off the mark so far; with rains just 5 percent short of normal and also Oil and gold have also seen a sharp price falls and Crude oil prices are down 15 percent in the past month, according to ET.

By this fall in gold prices, gold has become cheap with other things too such as  cooking oil and good rains bring good harvests which inturn means higher rural demand for edible fruits and veggies. The bill of imports of oil and gold will also be low which means the government and RBI need not lose sleep over fears of inflation and the pressure on raising rates will also subsequently be low.

Some experts say that the government can raise public investment to offset private sector capital spending blues and raise more money from disinvestment as blue-chip oil firms now command a better value. The oil price fall will surely reduce the borrowings of refiners and cut Oil and Natural Gas Corporation Limited’s (ONGC) subsidy burden.

 According to the fall of gold price in these recent months, if a buyer wanted to buy 10 grams of gold two years ago, but had put the money in his savings bank account instead of buying, he will now be able to buy 15 grams of gold with that same amount which he had saved earlier. The fall in prices of gold and oil means that the rupee will remain stable and the country's fiscal arithmetic will be in a comfortable position.

This in turn means that the Finance Minister ‘Arun Jaitley’ will have to step up infrastructure spending and reduce direct taxes. When RBI cuts rates, households will be able to spend much more and generate more demand in the economy, setting the stage for good growth of Indian economy.

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