“Paper money eventually returns to its intrinsic value — zero.” — Voltaire
Over 300 years, the British pound lost 99 per cent of its value. The rise and fall of the Asian currencies, in the 1990s, prove right the prefaced word of caution. Financial overextension, an alarming rise in foreign debt, and hyper-inflation drive us down a steep precipice, rudderless.
For the capital mistakes of politicians, bureaucrats and the Indian elite, the poor Indian should not be sentenced to capital punishment in the form of continual, illogical fuel price hike, as you like, fuelling all-round inflation, hopelessly impoverishing him, upsetting the fragile public transport economics.
Inflation, fiscal deficit, current account deficit, and then currency devaluation operate not in watertight chambers. They move in a vicious circle, complementing each other.
Desperate are the naïve moves like ‘fuel-curfew’ and callous threats of further dosage of mindless price increase. The only thing constant is the sheer absence of imagination and reforms to reduce oil consumption through a conscious promotion of public transport vis-à-vis private. Like a seesaw — when one side is stable, the other side goes unstable — fuel price rise leads to higher transportation costs, resulting in general inflation and higher government expenditure — increased D.A., rising cost of travel, purchases and contracts — (offsetting benefits from fuel price hike), which eventually end up in a wider fiscal deficit, impelling the government to scout for external borrowings, woo ephemeral FIIs, FDIs, whose servicing/repatriation itself worsens CAD, back to square one.
A plethora of baffling domestic/international factors frustrate our efforts to cut consumption of petroleum products, and mitigate hardship. The recent, reasonably successful pattern of direct cash transfer of subsidy for cooking gas could be an intelligent management model to streamline the slippery oil scenario:
a). Let GoI — through a permanent Judicial Petroleum Commission — transparently fix the economic price of petrol/diesel/cooking gas every week/fortnight/month;
b). A subsidised entitlement — like nine cylinders of cooking gas — maybe 600 litres of petrol/diesel per annum, for all motor vehicles put together, in every household;
c). Like for cooking gas, when the vehicle owner pays the full price at the petrol pump, the subsidy amount would get credited forthwith to his/her Aadhaar-linked bank account;
d). Over and above this, any quantity, as required, would be available but, without subsidy, as in the case of gas. (Later on, it could be fine-tuned, bringing in differential subsidy for fuel-efficient economy vehicles vis-à-vis limousines.)
The Finance Minister, the RBI Governor and now the Petroleum Minister, singly trying to counteract the gravitational pull of the rupee, resemble Atlas holding the globe in Greek mythology. As our rupee nosedives, this writer thought it fit to do his mite.
Our dusty old bicycle — rusting in the carshed for some time — was oiled and overhauled, its crumbled tyres inflated, to make it roadworthy. Great! It runs — without fuel. With a spirited sense of adventure, this antique piece slowly moved out on to the road, from our housing colony to busy roads. Amused motorcyclists kept a respectful distance from this wobbling ‘endangered species’, while speeding limousines brashly overtook it, unbothered to reckon with this tax-free poor cousin.
If only we earmark one per cent of the proceeds of every fuel price hike to kick-start our dream bicycle-paths, vanishing footpaths, Pelican crossings, and to refurbish RTCs! No better recipe for a resurgent rupee!
This writer’s 62-year old lungs pumped hard to pedal the cycle, wondering why simple solutions ever elude us. In a soliloquy to the listening air: Satyameva Jayate, ‘Sada jeevan, Uchch vichar’, Swadeshi — Who lives if India, the Indian rupee, dies?
(The writer is a former IAS officer. Email: firstname.lastname@example.org)