The socialistic pattern of the country and its complicated and woven form of subsidy already ensures that those who have enough give whatever they can, for those who do not have much.
Are you feeling benevolent enough to give up your LPG subsidy? Do not forget that if you are using the subsidized LPG, you are not taking anything free from the government. You have already paid for your own LPG subsidy and for many others, in the form of tax!
The socialistic pattern of the country and its complicated and woven form of subsidy already ensures that those who have enough give whatever they can, for those who do not have much.
Even the timing of the giving up of LPG subsidy is also wrong. The world is going through the 'Acche Din' phase in terms of commodity prices.
This is especially good for countries like India, who are net importers of energy. We always feel generous during such good times.
The price of crude oil is at around $45 per barrel. Let’s rewind to 2008. Crude oil was rushing towards $100 a barrel and breached $145 per barrel. Those were times when China was busy buying and commodity prices sky rocketed.
Before it fell to a ditch-like low of $40, the seven months were the toughest for Indian oil companies. They were running out of money, and the government was going into a tizzy. There was immense pressure from the oil marketing companies to cut down subsidies, as the infrequent oil price hikes were not helping them.
While it is impossible to know what could have happened, had crude remained at around $100, the shape of subsidies would have been different.
The world has become a very uncertain place now, where black swan incidents are expected and any change in the commodity cycle may put you in the red.
Crude oil apart, all the trends indicate towards inflation which might soon catch up with the middle-class householder. The prices of vegetables and fruits are already hitting hard. The year 2015 has been the hottest year ever since temperature is being recorded, making it a bad year for all crops. The prices of daal have already breached highs and rice is all set to get just as expensive.
Adding to this, if the 7th pay commission becomes a reality, India might soon reach hit the inflation levels of 2012, of over 12%. Amidst this season, the good tidings of 'Acche Din' in terms of salary hikes (for the private sector) and job opportunities have not improved.
This is the householder’s side of the story. From the other end, the subsidy is being promised to those who are much more downtrodden than a middle class householder. The picture is a lady who cooks over firewood. It is a sad picture.
The definition of poverty in India is very vague. A number of households who cook over firewood, however, are not necessarily poor. Many Indian villages have homes where women cook using firewood while watching their favourite TV shows on their colour televisions with a set-top box. Since cable is not very reliable, a number of them prefer dish TV connections, and it is a common sight to see them on thatched roofs.
Just a reminder that a colour TV costs around Rs 12,000 or more, while a gas stove can be purchased for Rs 1,200. The cost of a satellite TV connection is no less than Rs 200 a month. If the same household wanted to shift to a gas stove with an LPG connection, it is very much affordable.
Yet, India has a number of those that Emma Lazarus would have referred to as ‘huddled masses yearning to breathe free’. And, it is not smoke from the firewood that is choking them.
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