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Diesel price hike: India ignores trust of 800 Million people to rescue its Oil Companies  

Monday June 09, 2014


"As it seems, India is ready to sacrifice over 800 million lives by ignoring their trust and interests to rescue three of its oil companies! Should profit or business interests be so dearer to the government of India that holds responsibility to look after the interests of more than a billion people? It’s for the interest of India’s over 80% of the population that petroleum fuels and other products must remain subsidised and their pricing must be regulated."


Basudev Mahapatra


“Strongly backing the decision to hike diesel price and cap on supply of subsidised LPG, Planning Commission (deputy chairman, Montek Singh Ahluwalia) today said (to the Reporters), the country needs lot of tough decisions and diesel and petrol prices should be deregulated in phases to cut down deficit,” said a report in the First Post, an online news site of India.

It’s not only Montek Singh, several international bankers, who have strong business interest in India, and financial consulting experts, who – like Montek - hardly have any knowledge of the realities faced by India’s over 80% poor people, also opined the same and termed it as a sign of some dynamism, in over a last one month, on the part of Indian government.


Fuelling to India’s Complex Growth Story

In the report, as mentioned above, Montek was quoted saying, “Diesel price hike is a tough decision and we need lot of tough decisions to get to 8 percent growth rate,” while appreciating the decision of Indian government to effect a hike in diesel price by Rs 5.63 per litre and capping supply of subsidised LPG to six cylinders a tear per household.

One question to Montek – which class is the targeted and virtual beneficiary of the 8% growth rate he envisages and which class is really paying for it? To be very frank, as a very layman of India, I still do not understand Montek’s complex economic development story because, in last six decades, India has gone down deeper into the clutches of issues like poverty, hunger and malnutrition. A balanced meal has almost become inaccessible to most people of the country. The various governments, led by different parties in different times, ruling the nation since it became free from British government have grossly failed to pick up over 80% of its poor and deprived population to a level where they can dream of further development – economical, social and political even though it was always, is today as well, acclaimed to be the priority of the government.

Are the series of hikes in petroleum fuel produces, which resulted in massive rise in prices of all ranges of products including essential and food items, an indicator of India’s acclaimed growth and the concerns of democratically elected governments?

Fuelling to growth of Hunger in India

Despite being termed, by economic experts like Montek and his likes, to be a strong economy on the march to overtake China in next few years, India ranked 67th among 85 countries in terms of access to food. The country even ranks below several Sub-Saharan countries like Cameroon, Kenya, Nigeria etc. as indexed in the World Hunger Report.

The facts came in recent UNICEF reports are further shocking. While almost 19,000 children less than five years of age die every day across the world, India tops the list of countries for 2011, with 4535 (about 25% of the global figure) of such deaths occur in India everyday (16.55 lakh such deaths in India in 2011)! World Hunger Report and other studies confirm that India has the highest population of hungry children in the world – nearly double that of sub-Saharan Africa.

This clearly indicates at the realities behind the growth story, as often highlighted or presented by our economic development advocates, of India which is world’s largest producer of milk and edible oils, and second-largest producer of wheat and sugar. So, it’s not about production of food materials in the country, but lack of access to food for over 800 million hungry people of India who make the country world’s hunger capital!

The question is, how and why people lack access to food that is produced so abundantly in the country? The reply is not so complex, as it is to the economists and advocates of liberalisation of economy, to the innocent and partially hungry people living in the villages in the bauxite rich Karlapat forests of Kalahandi district in Odisha. “We grow one crop – paddy or maize – and are unable to buy supplementary food materials like dal, pulses and vegetable as the prices are sky high,” said Judhisthir Nayak of Mohangiri village.

This is the case with most poor farmers and agricultural labourers of the country who can’t afford to have a balanced meal in the current price situation. And, the series of hikes in petroleum prices have largely added to the price rise in India. The recent hike in diesel price will further isolate the poor people from accessing food materials for their consumption.

Hope of 800 Million Indians ignored to fuel Oil Companies

Often, to justify its decision of effecting hike in fuel prices, Indian government cites at the rise in international crude oil prices and loss, thus, incurred by its public undertakings like Indian (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) that, all combined, have the major share in importing and selling petroleum products in India.

Earlier, pricing of petroleum products were regulated by the government and it always remained subsidised because of the development needs of the country and its direct link with the prices of food and essential items. Petroleum fuels like petrol and diesel, two primary components for transport costing, play a major role in both India’s national as well as individual economy. So, hike in prices of these two items are bound to push further the prices of essential and food products and affect the population that travels to places for labour. A hike in petroleum fuels is certainly a direct burden on the total labour population of India.

The hikes in fuel prices in the recent past and decision to deregulate them have already severely burdened the farmers, agricultural, construction and other category labourers. In general the hikes have affected life of over 95% of India’s population and, to a great extent, to their purchasing capability. In such a time, such a steep hike in diesel price is surely going to convert the daily markets of India more inaccessible for more than 800 million people comprising the poor and hungry total of India.

As it seems, India is ready to ignore the interests of more than 800 million Indians just to rescue three of its public sector oil companies! Should profit or business interests be so dearer to the government of India that holds responsibility to look after the interests of its people amounting over a billion? So, it’s for the interest of India’s over 80% of the population that petroleum fuels and other products must remain subsidised and their pricing must be regulated by the government till this huge population of poor, hungry and partially hungry is brought up economically and is empowered with minimum buying capacity.


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