While Petroleum Minister Jaipal Reddy has said the hike is driven by two considerations – the fall in the rupee and rise in price of crude oil – it’s easy to find holes in his argument, when one looks at the figures.
Indian oil companies draw their books based on the prices of the Indian crude oil basket, which in terms of dollars, is actually lower in May than in April and March this year, at $105 on the day the hike took effect (it was $124 in March, and $118 in April). That’s also far lower than in mid-2008, when crude oil prices shot up before crashing.
Yes, the drop in the rupee has affected the cost of the Indian basket. But then, does it make sense to increase the price of petrol alone? Petrol counts for only an eighth of the oil consumption, while kerosene, LPG and diesel make up the larger chunk.
India hasn’t gone the whole hog in deregulating prices of fuel, and perhaps with good political sense – but in terms of the economy, the crippling hike in petrol prices will only serve to anger the nation, while doing little for the companies involved as well as the rupee.
The majority of us use petrol to fuel our vehicles, and the price hike is bound to have an impact on other industries that are dependent on transport, including vegetable prices and vehicle sales. It was all very well to say that we would also benefit from deregulation, with costs coming down when the price of crude oil fell – but the reductions have been minimal, and the hikes exorbitant.
Our politicians can take to quoting Shakespeare all they want, and solemnly declare that they must be cruel to be kind, but the kindness has only been an empty promise. As the pundits study statistics, there are problems at home that can’t be solved on paper – rising hunger, granaries where stock gets spoiled, inflation in the market, low salary hikes (if any). Problems that the salaried and lower classes cannot dig their way out of.
It’s laughable that we compare our economy to that of China, when we don’t have the basic infrastructure in place to give our citizens access to their daily needs.
The current scenario with the fuel prices reminds me of the situation in September 2009, when Prime Minister Manmohan Singh was busy collecting laurels at the G20 summit in Pittsburgh, while Agriculture Minister Sharad Pawar told India he could only pray for rain, as the late monsoon wreaked havoc on the agricultural produce.
I’m not suggesting we must arrest development while we sort out the multiplying problems of the majority of the country. But can’t we regulate our spending better? Do we need to be throwing hundreds of crores into research for gadgets like the Aakash tablet, when we could be spending the money on subsidies for essential items instead?
There are times when it feels like India’s being run like a corporate entity, which holds marketing meetings at exotic resorts while denying hikes after appraisals, just so it can meet the criteria to protect its ISO status.
When we have the money to make large donations to disasters occurring in other nations, and money to fly our politicians on random friendly tours every few weeks, can the government expect us to believe our coffers are too empty to bring in subsidies for food and fuel?
There have been plenty of articles are written about the President’s foreign tours. We must be the only country that sends a nominal head on handshaking trips, in an age when videoconferencing has become standard. Worse, the trips make more news for the President’s slip-ups than for any business transacted.
If we’re cutting corners, can’t we at the very least choose the right ones?