It is easy to guess why the central government waited so long before increasing the retail price of diesel, LPG, and kerosene. These petroleum products are far more politically sensitive than petrol, the price of which was allowed to rise last month. When New Delhi finally squared up with the substantial and sustained rise in global oil prices, the revision in prices announced on Friday was sharp and painful to consumers: diesel up by Rs.3 a litre, kerosene by Rs.2, and cooking gas by Rs.50 a cylinder. The repercussions will be harsh and wide: an increase in the price of diesel, the economy's main transportation fuel, will push up the cost of food items, including fruits and vegetables, eggs, and many other perishables that are moved largely by truck. A hike in transportation costs usually has a cascading effect on food prices. In the context of high inflation, especially food inflation, this is extremely bad news for consumers. The calculation may be that LPG is the fuel of choice of the middle classes rather than of poorer sections but it is clear the Rs.50 price increase is deeply resented. As for the increase in the price of kerosene — the poor woman's fuel — there have been reports that a significant proportion of the fuel obtained from the public distribution system is being diverted for adulterating diesel and other more expensive fuels. But how does this make the price hike any less burdensome for the poor families that rely on kerosene for their daily cooking?
Faced with increases in global oil prices three years ago, the United Progressive Alliance government claimed it strove for equity, apportioning the burden among the stakeholders: the consumer, the government, which levies and collects taxes, and the public sector oil companies. This time too it claims to have softened the blow on consumers by scrapping or reducing customs and excise duties on petroleum and its derivatives, in the process forgoing some Rs.49,000 crore of tax revenue. The oil marketing companies say their “under recoveries” will come down by Rs.21,000 crore. Restructuring petroleum product prices may be an acceptable longer-term objective but any sharp increase in the retail prices will be hugely unpopular in a country where the basic needs of hundreds of millions of people are nowhere close to being met, notwithstanding the high economic growth rate. The government ought to take a major share of the blame for failing to meet this challenge from the standpoint of the people and with a longer-term policy perspective.
Keywords: fuel price hike, petroleum products, diesel, kerosene, LPG, global oil prices
By any arguements, this much frequent increase in fuel prices is not tenable for the government.It seems central govt. is more worried about the financial condition of the Petro companies than the companies itself. If at all the companies are facing losses, then let them come out to public with their balance sheets on monthly basis.Was there no occasion when the international prices reduced?Then why the prices were not reduced at that time?If the Central govt.is sincerely pro-public, it can order the state govts. to reduce the local taxes to off-set the increases.The effect of increase of prices of any goods should be felt by the so-called politicians who use govt vehicles and for their official as well as personal needs because they never purchase single litre of fuel for their use. It is shame to note prices of food items in the canteens in the premises of parliament/assemblies are in single digits.Dear politicians! Please think a while about the difficulties faced by the public.
To what extent a government can dilute the price hike from the OPEC countries rather than sharing it with the consumers. If at all it is resistant towards the rise of the prices it will be meta morphed in another sector. The rise of the fuel prices can also viewed as the directive to realize the people about the rational use of the oil, which in India is being used in arbitrary way. Although I am not supporting such a sudden hike in the poor people fuel prices, and at the same time put forward the need for the govt to show some relaxation in some other area for the poor (by cash transfers as proposed in the budget).
Again it can be said that we Indians have all the answers but fail in formulating them. So rather than thinking about the rise in the fuel prices which is used for the economic development in a wide perspective, we should discuss about the money circus (money laundering, failure in PDS, 2G scams, Adarsh Etc......) which can fill up the page & needs immediate action.
The impact of rise in oil prices is going to be really harsh for the common people.They are reeling under pressure and are forced to cut down expenditures on things that are important after fulfilling the appetite thing.The government has taken lot of steps for controlling the prices still the common people is suffering a lot suggesting the fulture isn't going to be bright.Still a lot is left for government to do,it need to focus on its own productivity as well as invest on other sources of energy.The government has tried to share the load of rise in prices among all ,but share of load on common people or what we say as middle class is additional, the government need to do something like reducing the vat on LPG,etc.The first and the foremost thing the government need to do is to think of reducing the demand and then the import of oil to curb the rise in prices, and for this the government need to focus on controlling the rise of auto industry which consumes oil in large quantity.
To avoid being burdened by the increase in price of this scarce resource, the ministry of new and renewable energy should focus more on providing alternative energy resources like solar/biomass cookstoves for rural applications.
It is defenitely a contentious issue. I remember having read an article in Indian leading newspaper from an ex Oil company (Indian) individual challenging the Govt. to give him free hand to take oil out from Indian shores. According to him, we have enough resources in our shores to satisfy our demand and even sell it outside. If India can send mission to moon, build supercomputers why not develop technology to drill and take oil out. Why do we have to depend on foreign companies for technology to drill oil. Let Govt. conduct research division like space and missile development wings for petroleum exploration and drilling techniques. It will benefit common man.
Further there is rumour spreading that we are not allowed by western and Gulf states to drill more oil out from Bombay High as bombay is in downstream side and all oil from Gulf will flow here and make them without oil sooner than predicted. Media should bring these aspects out and let Govt. build 10 more Bombay Highs.
There is little the government can do about international oil prices. If the rupee had not been devalued, we'd still be paying only Rs. 30/ltr or so for petrol. But even with the current scenario, it is disgusting to see luxury cars run on cheap diesel, but poor two wheeler owners are paying through their noses for petrol. Why is the government taxing the poor (Tax on petrol is around Rs. 27/ltr) while making it easy for luxury car owners to run cheap on diesel? Why this unfair disparity?
Do we realize that we are addicted to oil? It is clear that as we hit peak oil, oil will become expensive. Instead of jacking up prices in one shot, and subsidizing it, govt should slowly but regularly - every month - raise prices giving people time to adjust. And at the same time, use the recovered money to develop and provide alternatives to people that will help break our oil dependence and move on to electricity which can be generated within country with many sources: nuclear, solar, coal, hydro. There are other things the govt can do: convert our rail network to electric will save huge amount of diesel reducing demand and it will also provide jobs putting up all that electric infrastructure.
It is a proplem of middle class as it is on the stage of advancement and this type of price rise of lpg,diesel will definitely ruin their social structure of family.Government should give subsidy on these produts on long time so that middle class could be protected from price rise. Our govt does not think about the welfare of middle class and underprivileged people.They are only implementing policies without thinking of its impact on future.
Aren't crude oil price in international market falling? I read (in this paper) government increased prices not because oil was expensive but because oil companies were making losses..is that not correct?
Guys dont waste time in even thinking about this editorial, prise rise cant be controlled, never been controlled and will never be controlled. Oil is not something we cultivate, its based on the international pricing, demand and supply based thing and subjected to change as the supply-demand thing changed, who is to blame for. Instead demand the government to improve the massive public transportation like electric trains etc so that dependency on oil for running your cars and mopeds will reduce and our need for imports decrease..
It is clear that neither the Central government nor the State governments are serious about having a sensible taxation policy for petroleum products. The State governments are happy when their revenue grows with every petrol/ diesel price increase as almost the entire blame goes to the Central Government. However, they cannot continue to behave in such callous manner. Mrs. Mamata Banerjee's government has taken the first step in reducing VAT on LPG. Senior representatives of Central government and the State governments must sit together and decide a permanent response to crude price increase and subsequent increase in prices of petroleum products. Only if this is done, we can expect that the public would know how to deal with price rises of petroleum products in the coming years. If Central government and the State governments do not make a coordinated effort to deal with the issues involved, the sufferings of the poor will be aggravated even as parties in the opposition will agitate.
I have only one querry, The price hike among petrol, LPG and kerosene not a new phenomenon,almost every year there is price hike,that implicitely implies that the same situation will arise next year, than why not govt is paying heed into this matter. Albeit we have very few natural resource for oil, why not govt tries to explore new site in Rajasthan and Costal area.What an irony is there,one side govt motivates the people to opt for cylinder rather than wood in villages for preventing forests and same time hikes the prices in dizzying manner.
The UPA2 Government and its sister Governments in the States are utterly against the intersts of the poor, who live in subhuman conditions in the country. They simply shed corcodile tears over the starving millions. At laest, that is what their policies unveil. The increase in the price of the LPG affects acutely the sub-stratum in the middle class: the lower middle class. For them the Rs.50 hike brings about a quantum jump in their expenditure. If the poor cart off a part of the kerosene they obtain from the PDS system, it is not to fill their coffers. It is to secure a morsel of food to feed their little ones. The Government is said to be forgoing some Rs.49,000 crore of tax revenue. Is not the use of the term 'forgoing' inappropriate and irrelevant? Tax revenue does not constitute the private profit of any government, which is nothing but an arrangement or a mechanism kept in place to govern. The accrued tax must fetch the people facilities and services, not go to the monopolies.
The recent hike in Diesel and LPG Gas prices from the Govt was highly unacceptable.Due to this many side effects will happen.Mainly the Transporters will hike their charges and fright.Vegetable sellers in turn increase their prices,again the Onion price may shoot up .We will control the inflation shortly ,will be the reply from the Govt till their tenure. LPG Gas price has gone up by Rs 50 at15% was painful.The Ultimate sufferer is the Common man.when his Problems will be eased,is the question mark.?The Present Govt is Lack of Leadership and implementation.
This government is for "aam log" as they said, but it looks as if they are working for billionairs. Instead of giving subsidies to poor they are giving subsidies to oil companies.
There is uproar from the people against the announced retail price hike by GOI of petroleum products, namely diesel, LPG and kerosene, seriously hurting the common man. Gasoline gave its own sting a few weeks earlier. Abundant logic supports the stand of the consumers.
The GOI on its part has given advertisement information as prop up regarding present price of crude at $ 110 per barrel as raw material cost which is nearly 50% more than what it was a year ago. The Government also depicts the mammoth subsidies being provided to each of the product. However the data is not complete
To enble a quick assessment, one would like to know the cost of refining/processing per barrel here, related fixed costs (10% depreciation, 7% maintenance inclusive of annual supporting investment of plant cost, salaries etc.,), finance and marketing charges at single digit levels. These numbers when computed together will give actual 'manufacturing and marketing costs' per barrel
Let us not forget that diesel is used also for private personal transport. Diesel cars are increasingly being used. It is not Govt's duty to subsidize these.
Regarding Petro hike, people tend to drive less after petrol hike..thereby helping themselves and the environment..
Regarding kerosene, when there is so much of diversion of Kerosene then its price hike is a prudent step according to me.
The prices of basic commodities are bound to increase with this latest increase in the prices of diesel & gas cylinder. The increase in the price of Gas cylinder by Rs.50/- could have been avoided if OUR government agencies were able to handle the misuse of domestic gas cylinders which are subsidized by the government.
Domestic gas cylinders are extensively being used in hotels, restaurants and even in the vehicles.
If government can curtail this illegal usage of domestic gas cylinders, burden which was put on common man can be reduced to a greater extent.
It is understandable that oil prices in international market are rising and oil companies are running in a big loss but some questions should have been raised on our policy for oil and gas, which is very critical for Indian consumers: 1.prices of oil and gas has not became unsatble suddenly. It is happening since many year but no lessons learnt till yet 2.Why can't govt come up with oil reforms so that we can become more independent in such crucial sector. 3.To reduce the losses of companies, govt has to go forward with cost cutting factors,they have to identify the waste and then have to reduce the waste 4.more refineries should come in picture so that cost on gas transportation can be reduced 5.Govt has to find the other alternative.
Instead of trying to win cheap popularity by donating billions of dollars to countries like Afghanistan, those from Africa, Bangladesh and so on, our government should give this money to our own oil companies. This will help in reducing the rising fuel prices. In fact all such external donations must stop till the contextual price rise situation gets fully checked in our country. Oil Minister Jaipal Reddy should seriously consider this proposal. Of course the ideal thing would be to get back all our black money from abroad and transfer this to the Oil ministry but that is asking for too much!
It is true that there is no magic wand to set right the pressures of high inflation now being supplemented by the rise in fuel prices.If one thinks, though India is growing at a healthy rate and the amount of money in the coffers is steadily rising, the disparities and inequalities are not being mitigated.One must see this through the kaleidoscope of corruption where the rich and the greedy are hoarding all the essentials just to meet their vested interests. India must go for a long term solution than a short term rate hike just to ease the pressure on the OMC's who will most likely face the same pressure again.
The argument of the neo-liberalists that subsidies lead to 'wasteful consumption' has its own limitations. While the developed nations are far from agreeing to drastically cutting down the export subsidies on agricultural goods, the developing nations are pressurised to cut down their susidies. Though many of the petroleum products are deregulated now but broadly their prices are kept under control by governmental intervention. The decision of the government to increase the prices of diesel would do much harm to the existing inflation scenerio by pushing up the cost of food articles. The measures taken by RBI can at best cut the demand. It is true that government has limited option at this juncture due to spiralling International Crude Oil prices but the prices of petro products esp. diesel and kerosene should have been held back considering the hardship common people are facing.We must remember that oil subsidies to OMCs may be met by increasing direct taxes without harming the poor.
Adversity and misery bring out the best. It is time to adopt alternative mode of energy like solar and electric for lighting homes and for transportation. Govt must take initiative to provide solar lantern to rural household especially to BPL. It will hugely reduce dependence on kerosene, use of national waterway for transportation of items must be increased; it will also help in many ways. Country needs to look for every alternative for rescue from this situation.
Wth the increase in the prices of diesel, iflation, particularly food inflation is expected to move northwards and would make common man think twice to buy food items. The cost of milk has been increasing as that of petrol in India. Poor economic policies combined with populist schemes of the Government are now showing their results
It is understandable that fuel price hike will hit the comman man. But was there any alternative? Fuel prices in India are among the cheapest in the sub-continent.OMC are bleeding because of high price of crude oil in international market. If we continue to subsidise this scarce resource then surely our fiscal deficit will reach dangerous levels.
It's better if you kill the major section of our country directly rather than killing us step by step by rising the price.......
This is true that the global prices are rising and the burden of the rising price somewhere has to be shared by the consumers also. The issue with the entire thing is that governemnt has failed to take measures. Whenever there is a decrease in the price in international market, the government rather than making reserve for the bad time goes on decreasing the retail price to pass a populist judgement and reap the momnetry benifits.
Also the government has failed to increase domestic production appreciably. The recent developments like the unprecedented favour to Relience and the report from CAG of inflating their capital(Reported in this space previously) only benifits the private industries are a big blow and complete failure to pass the benefit to the people of the country.
UPA govt has done nothing commendably since 2009 ...but did only one thing i.e to deprive poor of their basic needs by not trying to tame inflation.one important thing that govt never paid attention is giving importance to middle class as govt has schemes for the poor but not for the middle class.This hike has done rest of it.
I don't understand what the author is trying to do here. It has been the
habit of all the governments so far to increase the prices if global oil
prices hike happens. Fiscal deficit is too bad for a economy. Remember
1966 devaluation of rupee and 1991 foreign exchange reserve fiasco. All
the reasons are heavy fiscal deficit. Yes, the policies have to
concentrated on the poor. But I personally think government can't do
anything with respect to hike in fuel prices. We all know that
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