Thursday, June 5, 2008


Yesterday the government of India announced a hike in fuel prices whereby petrol prices were increased by a colossal 10% (and a slightly lesser increase in diesel prices). Although it was a move that has been anticipated for a long while, especially since the crude oil prices have reached a whooping $135 a barrel, this hike was received with a lot of opposition. People in some cities even took to the streets to protest against this hike. Even to opposition parties seized this opportunity to deliver a blow to the ruling coalition government. But what could the government have done? How long could it have sustained the losses from subsidizing petroleum products? With crude oil prices expected to breach the $200 a barrel mark by the end of 2009, I don't suppose it'd be a viable option for long. With the country's petroleum companies going broke, because of the government restricting their prices, things were really getting out of hand. Although the government was kind enough to offer subsidies to the public sector retailers, private retailers like reliance continued to sustain losses and were forced to shutdown their pumps. Now, Reliance plans to start exporting petroleum products to the lucrative European markets, in order to earn profits. It would be ironic that the nation would have significant diesel exports as well as imports. Although this hike would have a negative impact on the economy and increase inflation rates, as the effects of the hike actually trickle down into the system, it should have a positive impact on the environment, by forcing people to be more sensible when it comes to fuel consumption. I wonder if it was just a coincidence or did the government purposely choose the world environment week to announce the fuel hike? This rise in price, doesn't quite affect me, because I used to get fuel worth 500 bucks each time n I still will put in 500 bucks worth of it :P On a more serious note, my monthly budget went up by about 150-200 bucks (Thats in rupees(INR)) :( Was this increase in price avoidable? IMO, TINA (There Is No Alternative).

1 comment: said...

So true. And I'm glad they've not rolled them back - I mean, come on. How long is the government going to absorb the losses? We take diesel prices for granted; I bet a majority of the people don't even know that diesel costs more than petrol in other countries. It's only government subsidies that keeps it so low here.

It's about time this was done. Instead of taking the sensible decision, the stupid politicians keep trying to get more votes by playing the people's emotions.