Power outage, insufficient health care, unavailability of even the most basic of the foods- I think these are reasons enough to justify the 60-day national emergency declared in Venezuela on Saturday.
The country has been going through a serious economic crisis due to a drastic fall in the crude oil prices. The most basic functioning of the country has also become almost impossible. Read on to find out how bad is the Venezuela Crisis and why should INDIA be worried?
How bad is it?
Venezuela followed the policy of selling gasoline to poor and other Latin American nations at a price as low as two cents. They spent a lot more money on the citizens than what was fiscally possible. To counter this, the government started creating more and more money- money which has almost lost its value.
All this has lead to the high-end inflation that the country is facing right now. Besides this, the ridiculous and mis-invested resources on the growth of the state-run oil and industrial complex have added to the poor conditions in the country.
People are starving; and starving to the point where they are killing the street animals to get one meal in days. Power outage in the country is so bad that the president has requested all the ladies out there to not use a hair dryer. Electricity has been disconnected from most of the government and private offices and banks. People have been requested to make use of the solar power as much as possible.
Reports have shown that people have fallen down to the standards where they are robbing the public markets for basic necessities. The country is seeing long queues for the never ending and never satisfying series of needs (AND NOT WANTS). The government has failed in arranging for imports enough to feed the citizens at least one proper meal.
Following the crisis, Venezuela is a now a home to criminal and inhumanly violent activities. People are being shot, murdered and attacked. And to add to the misery, the country is falling miserably short on proper healthcare services too. It’s all a big circle of poverty, hunger, misery and violence.
Why should India be worried?
Venezuela has the largest oil reserves in the world. Despite this, the government has not been able to save enough money for such times when the prices are almost touching the ground. These crisis are posing a big threat to our still developing and economically struggling nation.
India is the third largest importer after Saudi Arabia and Iraq. We import about 11.4% of their crude oil. An unreasonable rise in price of the imports or a complete cut-off of the import is what the Indian government should be worried about. Reliance Industries Limited has about a 15 year contract (which is still ongoing) to import 40,000 barrels in Venezuela. A country which is not able to provide a decent level of living to the citizens can hardly be trusted with any commitments what so ever.
A direct corollary of all the chaos in the country is the depreciating currency. The Venezuelan currency has lost its value in the international market, making things uglier for both- themselves and their importing countries. India has proposed to offer a barter system of exchanging oil-for-drugs to recover the millions of dollars owed to the Indian pharmaceutical companies.
Venezuela has no exports that it can talk of now. Oil was its bread and butter. But now, the absence of exports has lead to the debate whether the government or the economy- which one will fall first. It is high time that the government moved from announcing a 60-day national emergency to seeking help and actually working out things for the suffering parties (and the citizens). Probably dollarization and doing away with the import duties might help the cause considering that the current exchange rate of the currency is 0.1 USD only.
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Views presented in the article are those of the author and not of ED.