Petrol price hike

On 22/5/2012 Budget Session of Parliament ended and UPA 2 celebrated its third anniversary. Till 1998 there was no tradition of a government celebrating its anniversary. Governments headed by Jawaharlal Nehru, Lal Bahadur Shastri, Indira Gandhi, Morarji Desai, Rajiv Gandhi and Narasimha Rao did not celebrate their anniversaries. Other governments lasted less than a year. The tradition began in 1999 when NDA government headed by BJP’s Atal Behari Vajpayee celebrated its first anniversary. For BJP it was a great achievement. Their government in 1996 had fallen within 15 days.

On 23/5/2012 petrol price went up by 7.50 rupees or more. Some said it was UPA’s gift to people on their anniversary. Many were angry. They said the hike hit common man. Some justified hike. Some said the hike was done by oil marketing companies (OMCs). Satyavrat Chaturvedi admitted it was a government decision. Some said the people who use cars are not common people. They are middle class or rich people. There is fiscal deficit that needs to be bridged. Dollar value has gone up. OMCs are bleeding. Subsidies should go. Prices of diesel, LPG and kerosene should go up. Some said the hike should have been gradual. Some demanded rollback. BJP announced Bharat Bandh.

Foreign companies do not want to invest in India because after 2G case and Vodafone case it is a no-win situation for them. In 2G case, the government gave 122 licences and Supreme Court cancelled them and the government did nothing. In Vodafone case, Vodafone won the case against the government in the Supreme Court and the government changed the law retrospectively. Foreigners who can take out their money are doing it. Even Indian companies do not want to invest in India. They want to invest outside India. Demand for dollar led to rupee depreciation. India had two options. One was to sell dollars till rupee became strong enough and OMCs did not make loss. Second option was to tell Saudi Arabia and other petroleum exporting countries that we will pay for oil in rupees and if they do not agree we will import all the oil we need from Iran. The government did not use these two options.

There are petrol cars and diesel cars. Petrol is used by taxis and autorickshaws. Petrol price hike affects common people. If oil companies are bleeding they should be shut down. Private companies can import and sell oil. During NDA rule there was a decision to privatise OMCs. Ram Naik was petroleum minister. He did not want to lose his power. He got George Fernandes to oppose privatization of OMCs. NDA lost power.

Fiscal deficit is due to spending more than income. Corporates talk of schemes like NREGA that cost corporate amounting to 5,00,000 crore rupees per year are the reason for the deficit. Someone mentioned expenses incurred by president, ministers and MPs. For people like Rajiv Kumar of FICCI, 205 crore rupees spent on tours of Pratibha Patil may be a small amount but not for a majority of Indians. Corporate debt restructuring is a reason for fiscal deficit.

There is talk of austerity but not much action. Foreign tours by ministers were supposed to be off but petroleum minister Jaipal Reddy was in Ashgabat when the hike was announced.

Bandh is wrong. There should be no Bharat Bandh. BJP and other parties should protest without causing inconvenience to people. They can have fast at Jantar Mantar for a day. UPA should explore the two options to reduce oil prices.

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