Petrol Bomb to Maim IT

Understandably throughout last week, the jump in petrol prices dominated most of the column spaces of newspapers and prime time television. Leaving aside the political repercussions, such a steep hike is bound to affect every common man, irrespective of whatever be the economical merits or demerits of the government decision. Not surprisingly, while political forces opposing the government were up in arms publicly, there was vocal resentment sweeping across the country. After all, it is not just that your car travel becomes costlier, this hike would impact every sphere of life; the IT sector would be no exception to the rule.

For one, consumer sentiment will be at an all-time low-with discretionary spending getting off almost everyone's personal budget, it is bound to have an impact on the balance sheets of the IT vendors. After all, when prices of all essential commodities skyrocket, who will prioritize purchases of laptops and printers? And as the vendor balance sheets dwindle, the partners too will get hit with their revenues going southwards. This, in turn, will lead to more conflicts between vendors and partners over stocking and sales mismatch. After all, no one would like to end up with bloated unmanageable inventories.

Prices of IT products too will start climbing northwards. As if the falling rupee against dollar and its terrible impact on pricing was not enough, the petrol price hike would only aggravate the situation. Conveyance, logistics, supply, services and sundry other items would all become expensive leading to debilitating impact on the purchasing power of the consumers. While IT products had already been consigned to low-priority item list, expensive price tags would further discourage end users from even considering buying them. In addition, petroleum-based products like optical drives and power systems would see their prices automatically increasing, thus not just making them out of bounds of consumers but even sounding the death knell for many products. Looks like the Government's 'petrol bomb' will lead to a big explosion in Indian IT.

(rajneeshd@cybermedia.co.in)