Tag: Petrol Price Hike

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.

Congress versus TMC

Congress and TMC are partners in UPA at centre and have coalition government in West Bengal. The relationship between the two has worsened in recent days. There is talk of Congress aligning with SP after UP elections.

There are no permanent friends or permanent enemies in politics. Congress needs TMC at centre. TMC does not need Congress in West Bengal. Both call each other CPI-M’s B team and compare to watermelon, green outside, red inside.

Mamata Banerjee, leader of TMC, opposed Congress on Teesta River Water Treaty, petrol price hike, FDI in retail. TMC voted for Lokpal Bill in Lok Sabha and opposed it in Rajya Sabha and moved amendments. Dinesh Trivedi said he had opposed Lokpal Bill in cabinet. He was overruled.

The decision to rename Indira Bhavan as Nazrul Bhavan has become another issue. Congress members oppose renaming of Indira Bhavan. In India many buildings, roads, airports and other places are named or renamed after members of Gandhi family. Alexander Dock became Indira Dock. Connaught Circus became Indira Chowk. Rajasthan Canal became Indira Canal. Southernmost point of India was renamed Indira Point. There is Indira Gandhi International Airport. There is Indira Gandhi Open University. There is Indira Awas Yojana.

Congress members say their sentiments are hurt. Their sentiments are not hurt when babies die in hospitals. TMC says there is no notification naming the building as Indira Bhavan. If something can be renamed after Indira Gandhi something named after Indira Gandhi can be renamed something else. If TMC’s intention is to please Muslims it is following in footsteps of Congress which announced 4.5% minority reservation in OBC quota and provided for a minority member in Lokpal.

Some people use words like blackmail regarding TMC. Politics is not charity. TMC has its interests. UPA does not have a co-ordination committee. Congress takes decisions and expects allies to fall in line. DMK is out of power in Tamil Nadu and needs Congress. Other parties do not have many MPs. If Congress breaks alliance with TMC, Congress ministers will be out of West Bengal government and TMC ministers will be out of central government. TMC government will not fall. Congress will need MPs to keep UPA going. Getting SP in UPA to make for numbers will create new problems.

Petrol price hike unjustified

Petrol price has gone up once again. There is no good reason for the hike. It is a myth that oil marketing companies decide the hike. When there were elections in four states and one union territory petrol price did not go up. The hike happened after voting was over. That time LPG price also went up.

The government says hike is inevitable because of increase in price of oil in international market. When the price comes down in international market petrol, diesel or LPG price does not come down. Then it is said there is subsidy for diesel, kerosene and LPG. The government’s manipulation of exchange rate has resulted in rupee being weak and common people having to pay a high price. When rupee appreciates against dollar the government buys dollars and keeps the value of rupee down. When rupee depreciates the government does not sell dollars and keep the value of rupee. It is done to favour exporters at the cost of 121 crore Indians.

USA prints about a trillion dollars every year and dumps them in the market. That should have brought down the value of dollar. However India has printed notes and when USA goes down India goes down even further. If India had not manipulated currency the prices of petrol, diesel, kerosene and LPG would have been about one tenth of what they are today.

PM Manmohan Singh he does not have a magic wand. You don’t need a magic wand. You have to do the right thing. DMK, NCP and TMC opposed price hike but no one has talked of currency manipulation that is the root of the problem.