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June 06, 2012

Petrol, Politics And The People: A Discordant Note

The anger simmering within the body politic of the nation over steep hike in petrol prices is neither surprising nor unexpected. In fact, the Indian National Congress led regime had withheld the increase in petroleum products despite skyrocketing prices of the crude oil it imports for the fear of the very same anger. It did not want to go to assembly elections in five provinces after so terribly offending the electorate. But then, faced with the twin catastrophe of devastating defeat in the elections coupled with plummeting prices of Indian currency it was not left with another option anymore.

The popular anger, however genuine and spontaneous, seems to have missed several fundamental issues. Ironically, these questions are the ones which give one an entry into understanding the widening gap between the rich and poor of the country, the gap often metaphorically referred to as the gap between India and Bharat. The first and foremost of these questions is if the anger is really that popular, and national as it is made out to be? Is the bottom seventy percent of the Indian population that lives on less than 1 USD a day equally angry with the hike? This is the same section of the Indian population that faces the danger of getting disentitled from welfare schemes of the government by the Planning Commission which is hell bent at pegging the Poverty Line at INR 28 a day, or less than 50 cents! That too by a deputy chairperson who spends more than 4000 USD a day on his foreign trips! This group, undoubtedly, would not own a petrol vehicle to get affected by the hike, will it?

One can still argue that such a hike in petrol prices affects the economy and raises the rate of inflation. The consequent price rise of all commodities, would then, worst hit the weakest sections compelled to buy their food on a daily basis the worst. However, this logic holds no water for petrol plays all but a miniscule role in public transport. Second, the price rise in basic amenities is impacted more by the actions of hoarders who buy the agricultural products on dirt cheap prices and then future trade in them. The fact that such hoarders have access to the high corridors of power is also a common knowledge. In fact, we have had agricultural ministers announcing the ‘imminent’ rise in the prices of essential commodities and thus helping the hoarders. Third, in a country where millions of tons of food grain rot for lack of storage, the reasons of price rise lay more in the power relations that define the politics of production and distribution than petrol.

The response of the automobile industry to the steep hike unravels even more layers of the petro politics. As the very first response, most of the leading car companies dropped the prices of their petrol model by a staggering 50 thousand rupees, a fact that should have opened the floodgates of debates but which is, conspicuously, missing from all debates. What does such a sharp decrease imply in country that had defied the global trends in car sales and had saved many of them from going bankrupt in these times of economic recession? It means that the profits they were extracting from Indian buyers is much more than this price cut, and also that the buyers were least bothered with that. It also means that any subsidy on the petrol prices will help only this set of people and none else.

How, then, can anyone justify subsidising petrol prices by the Indian taxpayers money? That too when a litre of petrol still costs less than a cup of coffee in coffee houses like Barista that are considered to be middle class? Also, the class crying hoarse on the hike in petrol prices is the one that has stood by the neoliberal model of governance and has played a pivotal role in rolling back subsidies that were meant for the poor of the country.

The class, aptly represented by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industry (CII) have demanded a complete withdrawal of the government from market. This is the class that opposed the welfare schemes like Rural Employment Guarantee Act as a burden on Indian economy even in the face of deepening agrarian crisis resulting in countless suicides by the peasants. This is the class that opposes the governmental price control of even life saving drugs. This is also the same class that finds no qualms against the tax exemptions given to the Indian Premier League that makes huge profits. Forget welfare state, this class seems to turn India into a state ruled by the ideas of Crony Capitalism.

Despite all this, there are real and genuine concerns regarding this hike for the middle and lower sections of the behemoth that masquerades as a homogeneous middle class. This section of the Indian citizenry is the one that is almost completely dependent on private transport for its everyday existence and this is the one, therefore, that will face the brunt of the hike. Also, this class is not dependent on their bikes and scooters, and small cars of late at least in few cases, by choice but because of severe lack of a reliable and efficient public transport. (Counterparts of this class in almost all cities of advanced world rely heavily on public transport like subways and public buses and there is no reason to believe that they will act differently if public transport system was as robust here as well).

The way out for this class is, however, for struggling and building a reliable, comfortable and efficient public transport system and not paying for the riches’ petrol from their taxes. The superlative improvement in Delhi’s public transport and people’s ownership of the Metro is a case in point. As a matter of fact, both the quality and efficiency of public institutions depends heavily on the stakes this class has in them, with superb results of Kendriya Vidyalays (Central Schools) and Jawahar Navodaya Schools year after year providing another evidence for the same.

Subsiding petrol is not only bad economics but bad for democracy as well. Forget the petrol, even the subsidies on the diesel that runs the private cars is criminal wastage of the Indian taxpayers’ hard earned money and it should be stopped immediately. The real need of the hour is rethinking the subsidy regime and restructuring it in a way that it helps the poor and the marginalised. The process can be initiated by finding out ways to delink the prices of diesel that is used in running public transport and irrigation from the one that is used for private cars.

The money thus saved could, then, be used for decentralising the agricultural storages and building warehouses in different part of the country. That will not only save the food grains to rot because of lack of storage but also save money that gets wasted in transporting it from the mofussil India and then bringing it back there only! That will save a lot of money India spends on importing crude oil and save the environment is beside the point. If we don’t turn this hike into such an opportunity all that will happen is that the flashy cars on the roads will turn into their diesel variants and we will keep paying for their fuel from our own pockets.

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