Monday, May 16, 2011

Hike in Petrol Prices

A whispering campaign was on for the last several months that immediately after the declaration of election results for five state assemblies that went to elections, the prices of petrol and diesel would be hiked. After the declaration of the results, the process of formation of governments in these states is still on. Now that the government has hiked the petrol price by rupees give a liter, the whispers have come true.
Unexpected Steep Rise
Both Finance Minister Pranab Mukherjee and Petroleum Minister Murli Deora had hinted about price hike on several occasions, but no one expected a steep rise of Rs. 5 per liter in price of petrol. It may be recalled that the prices of petrol has been hiked eight times during the past nine months, the present hike being the highest ever. It has been noticed often that whenever there is a hike in the prices of petrol and diesel, the price of food articles also go up. Freight and fares also go up.
The issue was discussed threat bare at the meeting of the Group of Ministers (GoM) headed by Pranab Mukherji. The GoM also discussed ways and means to keep price rise of essential commodities in check, but to ignore the hike in prices of crude oil at the international level, was well nigh impossible for the government. The finance minister maintains that going by the current scenario, the government was left with no option because, despite having raised the price of petrol by Rs.5 per liter, the oil companies still continue to suffer a loss of Rs. 5.5 a liter on petrol.
Prices of Crude Oil
Despite that the prices of crude oil had reached the highest level in the international marked in the last two-and-half years, the oil companies had refrained from raising the price of petrol since January, though the companies continued to exert pressure on the government to hike the price. The government continued to delay the announcement because while it did its best to save the people from the price rise is essential commodities and to bring inflation under control, it also had the elections in five states before it.
The oil crisis started in the international market in wake of the Iraq war. It had its impact on the entire world. The situation became all the more serious after the relations between the United State and Libya sourced. Further, the imposition of sanctions on Iran by the United Nations also aggravated the situation. It is not mean to discuss here as to which country imports oil from where or does not import at all. The truth, however, cannot be ignored that the rise in crude oil prices does have an impact on the oil industry in all countries.
The government had decontrolled the petrol prices in June 2010 and since then the prices of the commodity have been hiked for the eighth time. It was the compulsion of the government as well. The opposition Bharatiya Janata Party (BJP) has termed the hike in petrol prices as anti-people saying that the government was awaiting the results of the elections held in five states. The accusation by the BJP loses its strength because both the finance minister and the petroleum minister had already hinted a couple of months ago that the raising the petrol prices was the compulsion of the government.
Despite the price rise of Rs. 5 a liter in petrol, the oil companies continue to suffer a loss, which makes it clear that another hike in petrol price may be announced soon. The BJP has linked the current hike with politics but, should there be a further rise in the petrol price in the future, with which the BJP would link that? It would be futile to believe that the opposition is not aware or ignorant of the rise in crude oil prices in the international market. A government when takes such a hard decision, discusses the issue threadbare but under unavoidable circumstances the price rise becomes its compulsion.
Burden of Price Rise on People
One can not deny that with the rise in petrol prices, the burden of the price rise on people would further, increase and that it would also have its impact on inflation. Even the prices of the LPG and kerosene and diesel may be affected. Yet the situation that the government faces is unavoidable. No government wants to see its people falling in the grip of miseries. The government has taken the decision after the GoM report. It can be safely claimed that the decision of the government hints at some kind of a concrete strategy as Finance Minister Pranab Mukherjee has admitted that the government was left with no other option.
It is always easy to criticize the government. Protests, demonstrations and sit-ins are held against decisions of the government. Yet, no opposition has ever come out with an alternative solution to any problem. Nor does it ever suggest how a particular issue can be solved.
The government decided to hike the price of petrol in view of the situation that it confronted but now it would have to think how it should provide relief to people. The meeting of the GoM is scheduled during the current month itself to take a decision on the prices of LPG, diesel and kerosene. The government needs to be abundantly cautious while making a decision on it. At the same time, it needs to think on the subsidies too, so that some kind of relief is given to the people and opposition may not find an opportunity to criticize and take on the government.

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