Every time there was a protest on the upward revision of petrol prices by the state–owned oil marketing companies prior to the beginning of the collapse of crude oil prices around July 2014, the government would wash off its hands stating the auto fuel was a deregulated commodity and the consumer must bear the market price. The consumers had no choice but to pay up grudgingly before driving past the filling station. They had learnt to live with the so-called market reforms, albeit the hard way. Like everybody else, they did not expect crude to fall and fall so steeply. Exactly the way they were forced to pay for petrol equivalent to crude selling at $109 per barrel till July 2014, it is only fair that they should be charged nothing more than the commensurate of today’s market price, which is $26 per barrel (Indian basket). After all, it was the government) which taught him all about deregulation and market prices.
But the consumers would not be wrong if they feel they have been short-changed because it is not they who have refused to toe the reforms on fuel prices, but the government which has turned the entire deregulation model upside down by pocketing the major portion of a whopping 75 per cent drop in the crude oil prices between July, 2014 and the second fortnight of January, 2016. On the other hand, the pump prices of both petrol and diesel have been reduced just between 18 and 23 per cent, respectively, with the government using the oil bonanza to fill up its coffers, by about Rs 2,50,000 crore, as some estimates suggest. Excise hike of over Rs 10 per litre on the auto fuel has been slapped to garner huge cash, which could have gone into reviving the tepid consumer demand, holding back the economic recovery.
True, the government has cut petrol and diesel prices by over a dozen times as asserted by Petroleum Minister Dhramendra Pradhan and Finance Minister Arun Jaitley many times. Reduction was effeted about a dozen times, but in tranches of few paise. Illustratively, in the national capital, the petrol price stands reduced to Rs 59.35 in January, 2016 from Rs 73 per litre in July,2014. Compare it with a crude fall from $109 to $26 per barrel. Rupee depreciation of about 12 per cent would not affect the government’s capability to pass on the benefits either. The finance minister is guarding off the criticism, claiming the oil surplus would be used to fund developmental projects. But then, is it not being used to keep off the fiscal pressure which would only increase with extra burden of the Pay Commission next year?
Published 19 January 2016, 18:34 IST