In the run up to the general elections in 2014, among the umpteen promises Mr Narendra Modi made, two were supposed to bring much relief to majority of people. One, the BJP government will bring down prices, including oil prices; two, one dollar will become equivalent to 40 rupees. It is anybody’s guess on what basis Mr Modi made such ‘dream-like’ promises; it is also not clear who are the economists he consulted before making those tall promises. Now the reality has started to bite. Oil prices are rising on a daily basis and rupee plumbs newer depths every day.
With Assembly elections in five States at the doorstep and general elections only a few months away, the government is in jittery. The price cut of Rs. 2.50 per litre of petrol and diesel announced by the Centre this past week is nothing but a sop to douse the fire of rising fuel prices. It is tokenism before the Election Commission announces the poll schedule. Or else, the government would not have allowed the domestic fuel prices to go upward in the last four years even though international crude prices were constantly on the decline.
In 2012, during the UPA government, India had to shell out $120 per barrel of crude oil, but the domestic price was around Rs 65 per litre for petrol. By the time Mr Modi settled down in his office, luck had it that the crude oil price crashed to around $50 per barrel. The domestic fuel prices too should have nose-dived correspondingly, but the Modi magic took it upward. Making matters worse, in 2017, the government introduced daily revision of fuel prices which made big holes in common man’s pocket. Of course, the crude oil price is on the rise in the international market now, putting the government on a tight spot.
The main culprits in the sky-rocketing fuel prices are the Excise duty charged by the central government and the State levies. Half of the fuel price is due to such taxes. Hence, fuel prices can be brought down if the government takes consumer-friendly decisions. The authorities fail to recognize that fuel price rise has a cascading effect, leading to a chain reaction. Unlike prices of other consumer items, fuel price rise fuels inflation leading to all round upward movement of prices of most goods and services.
A people-friendly government would take immediate remedies to soften the blow of rising prices. Petrol and diesel are no more products consumed by the rich. Their price rise affects common man the most. Justifying it on the plea that the revenue from the increased price is channeled to construction of toilets, as stated by Minister Alphons Kannanthanam, is nothing but adding insult to injury. The disenchantment of the common man has been echoed by none else but Ramdev, an ardent supporter and ally of Mr Modi and his government. “The fire of rising prices (of fuel) will prove extremely costly for the Modi government,” he said in a recent interview. One has to wait till 2019 to see the impact of this raging fire of oil prices.(Published on 08th October 2018, Volume XXX, Issue 41)