ANALYSIS
The decision to partially deregulate oil prices is good. The government should stand firm on it.
The UPA government has at last decided to bite the bullet and decontrol oil prices partially. While petrol prices are being freed, diesel will be freed “ultimately”. Cooking gas (LPG) and kerosene, the holy cows of political populism, will continue to be heavily subsidised. It’s not a clean decision, but it’s a step forward from the dithering of the last six years of the UPA government.
Committee after committee has recommended various forms of market-determined pricing — the Kirit Parikh committee being the latest — to help the oil marketing companies stay in the black and to avoid punching a hole through the budget, but thus far populism has always won.
To be sure, it’s not yet certain that everything that’s been announced will indeed be implemented in letter and spirit. The decision to raise the prices of petrol by Rs3.73, diesel by Rs2, kerosene by Rs3 and cooking gas by Rs35 per cylinder will raise a political storm from Left to Right. The government will have to grin and bear it. It has the parliamentary numbers to withstand the pressure, unless key allies like the DMK and Trinamool start developing cold feet. It needs to stand firm.
The former finance minister, P Chidambaram, argued that good economics makes for good politics. But during his tenure he couldn’t convince his cabinet colleagues of the political wisdom of it all. But then, politicians have shorter time horizons than most people. The truth probably lies somewhere in-between: good economics can lead to good politics with a little bit of luck and good timing.
As things stand now, with nothing but the Bihar elections on the horizon, this is probably the best time to push ahead with reforms in the oil sector. The immediate impact of aligning domestic prices with international market trends would be a rise in prices — already in double-digits — but with a good monsoon and higher interest rates, inflation should start moderating over the next couple of months.
This is also a good time to explain to the public why oil prices — including diesel at some point in the future — need to be deregulated. We need to confront the myth that people are fundamentally against any increase in prices even if there is good reason for it.
There are many good reasons for deregulating, including conserving fossil fuels and reducing pollution, among other things. The alternatives can also be explained: excessive subsidisation of the non-poor will have to be funded by government borrowings or by printing currency notes, both leading to higher inflation.
Woman regrets paying Rs 500 for THIS dish at Virat Kohli’s restaurant, internet has mixed reactions
Rupee hits fresh record low against USD: Why is Indian currency falling against Dollar?
Z-Mohr Tunnel Opening: PM Modi inaugurates Sonamarg tunnel in Kashmir, to address rally
Meet man who founded Mukesh Ambani-backed Dunzo, now set to join Flipkart as...
Venkatesh, Rana Daggubati booked in property demolition case; details inside
Gautam Adani's another BIG move, collaborates with ISKCON to serve meals to...
Uttarakhand bus accident: 6 dead, 22 injured as bus falls into gorge in Pauri Garhwal
Trudeau Quits: Canada faces political uncertainty and leadership change
Traffic plan for Mahakumbh in Prayagraj: Diversions, parking details for devotees
Meet man with Rs 13791 crore net worth, he once worked for Ratan Tata company, left it to start...
Radhika Merchant wears simple printed outfit, loafers, the price will leave you SHOCKED!
Mahakumbh 2025 begins: First Shahi Snan today; know its significance, history and more
Bigg Boss 18: Chahat Pandey evicted, fans say 'she deserved to be in top 5 instead of Chugli gang'
IPL 2025: Punjab Kings name THIS ex-KKR star as skipper, days after buying him for over Rs 26 crore
Anushka Sharma, Virat Kohli's son Akaay Kohli makes his first appearance, video goes viral
What led Arjun Tendulkar to ditch Yograj Singh as his coach after IPL entry? Yuvraj's father answers
IPL 2025 to begin on THIS date, BCCI vice-president Rajeev Shukla reveals plan, WATCH here
'My face became big...': Sara Ali Khan shares her journey of losing 45 kg
Amid bankruptcy in country, Pakistan Army receives Rs 200 crore for THIS unbelievable reason
GRAP 3 curbs revoked in Delhi-NCR amid dip in air pollution levels
Gautam Adani's BIG plan, announces Rs 65000 crore investment in THIS state, not Gujarat, Maharashtra
Shikha Talsania shares Tiku Talsania's health update after his brain stroke: 'He is...
No helmet, no fuel: This Indian state proposes strict policy to reduce road accidents
Who is Devajit Saikia? Ex-first class cricketer replaces Jay Shah as BCCI secretary
WATCH: Drunk groom and his friends misbehave in wedding, bride's mother then...
This car wins 'Indian Car of the Year 2025' award, beats Maruti Suzuki Dzire, Swift, it is...
Vicky Kaushal, Ananya Panday to headline Gully Boy sequel? Here's what we know
Varun Dhawan gears up for Border 2 after Baby John debacle, sports new look; Watch
'Once-in-a-lifetime view': Comet set to shine through Earth's skies after 160,000 years
Army Day: A Forgotten Vision for a Better Karnataka?
India's largest govt bank loses Rs 44935 crore in just 5 days due to...
Khushi Kapoor, Junaid Khan share fun session with team on Loveyapa title track, netizens react
Security forces kill 3 Naxals in an encounter in Chattisgarh’s Bijapur district
Finding Soul in Machine: Exploring spirituality in machine learning
Makar Sankranti 2025: 7 traditions recipes to brighten your celebration
Bhooth Bangla: Tabu reunites with Akshay Kumar in Priyadarshan's horror-comedy
Voice artist's epic prank on scam caller leaves internet in stitches, watch viral video
Game Changer Box Office: Here's how Ram Charan, Shankar's movie is first blockbuster of 2025
'Prophet' who predicted Donald Trump assassination bid issues chilling WARNING, claims...
Woman wins Rs 40 lakh lottery, her surprising trick to get this jackpot will leave you shocked
Meet man who studied BTech from NIT, cracked UPSC exam in first attempt at 23, became India's...
Paraglider performs daring stunt, air-drops lighter to man in Goa, viral video sparks debate online
EAM Jaishankar to represent India at swearing-in ceremony of Donald Trump on January 20
This Indian alcohol is world’s best and most sold with a price of Rs...
Viral video of 12-foot roti leaves internet amused, social media says khana hai ya...
Ajay Devgn's daughter Nysa's candid laugh sparks trolling, 'always looks drunk'
This famous English song gets Qawwali twist, thrills audience, video goes viral
Mukesh Ambani's mega offer for Jio users; get unlimited calling, 1 GB data per day for Rs...
Mahakumbh Mela 2025: Amid heavy fog, devotees take dip at Triveni Sangam in Prayagraj, watch