The Election Commission’s (EC) directive advising the oil ministry to put on hold its decision to announce a hike in gas prices from April 1 raises a number of questions. The Commission’s guidelines enshrined in the model code of conduct followed at election-time forbids ruling parties from announcing “any financial grants in any form or promises”. But the proposal to double gas prices from the existing $4.2 per million British thermal units (mmBtu) to the proposed $8.3 mmBtu was finalised in June 2013 and notified on January 10 this year. Reliance Industries Limited (RIL), which was poised to benefit from this decision, has reasons to be aggrieved as the hike was notified before the model code came into effect.
But the Centre has deftly sidestepped the issue in the Supreme Court during the hearing on a petition filed by CPI leader Gurudas Dasgupta and lawyer Prashant Bhushan. Its claim that only the pricing formula was notified and an actual order hiking the prices was yet to be taken, points to electoral stakes forcing the Congress to go slow on a contentious issue. For one, it put the Supreme Court in doubt over intervening on a mere “recommendation or a guideline”. Politically too, the issue has become a hot potato. The Aam Aadmi Party (AAP), has made the alleged favours shown to Mukesh Ambani by the Congress on the gas pricing issue as its primary poll plank. Soon after the EC decision, AAP was quick to claim credit for stalling the price hike. On March 20, Arvind Kejriwal had written to the EC demanding a probe into RIL’s alleged funding to the Congress and other parties. He claimed that the hike fell under the ambit of “corrupt practices” forbidden by the Representation of the People’s Act.
Even while Kejriwal secures bragging rights, the UPA government can breathe a sigh of relief on another front. The knock-on effect of gas price hikes would have fuelled a fresh bout of inflation during election-time and compounded the Congress’ anti-incumbency woes. The spectre of steep pro-rata hikes hung heavy on piped and compressed natural gas suppliers to households and transportation systems.
The story is no different for gas-based power plants and the fertilizer industry which already supplies urea at a heavily subsidised rate to farmers. No arrangements were put in place before the model code came into effect to soothe the effect of these hikes on consumers. Under the circumstances, the EC’s considered decision to leave this issue to an incoming government was well thought out.
That the incumbent government too, was content letting its successor wrestle with the matter, is evident from its move to approach the EC. Election Commissioner HS Brahma has lobbed the ball back at the Centre pointing out that it was free to issue any order not violating the model code. If the government, an interested party, was itself in doubt that the price hike announcement would trip on the model code, the Election Commission can not be faulted for erring on the side of caution. An interesting legal battle is unfolding in the Supreme Court where the politics and the economics of the gas price hike are being called into question. The ingenious balancing act of the government — objecting to legal scrutiny on the specious ground that the January notification was merely the approval of a formula, while ducking criticism from corporate circles and political rivals by passing the buck to the Election Commission — smacks of Machiavellism.