Sunday, May 15, 2011

Petrol Prices - What are we trying to Achieve?

The Petrol Prices hiked up once again and this time they have been steep Rs. 5/liter.  I am totally unable to understand the hike, as the International Crude Prices went down by $10/barrel.  For me the hike immediately after the poll win of 3-2 by the ruling UDF seems to be the Rude shock to the electorate.  I mean when the Crude was really high, but polls were looming, the Govt. seemed to have kept the price hike by State Owned Oil Marketing firms in check. Now just the day after the hike is a jolt.

I am not sure if the Govt. has gone around to get the calculation right in this case that the hike per liter would result in monthly outflow of Rs. 1000/- straight up on the petrol expenses (calculated at avg 5 liter usage per day costing Rs. 750 + Taxes + Surcharge + Education Cess).  Added to this would be the other cases that would add to the Inflation and that would mean another increase in monthly budget by approximately 10%.  So who is going to be the most affected with this hike?  Certainly the Middle Class Salaried Indian.

Indian Middle Class Salaried Indian, the आम आदमी, who pays the tax to the tune of 50 to 60 percent of the Salary earned.  I know it seems to be exaggerated statement, but again if you calculate the Income Tax + Tax on every Re spent, it would turn out to be what I stated as 50 to 60 percent.

Now when the Middle Class is already burdened so much with Tax, just imagine the hit the monthly budget would take when the price hike is at Rs 5/mth. Certainly something that is not at all justifiable.  The Government as it seems is trying to divert the attention of the Electorate and the opposition from some major issue that is being dealt by the Govt where the opposition might have taken the Govt on task.  

However, the Govt needs to understand that with the price hike that it has went on for after beating the Left Front out of power in two strong hold states, will hit the ruling party's comeback spree real bad for the points mentioned above.  The Govt. must understand that when the Congress is trying to woo the electorate in UP, the hike would go a lot against it and the Ruling Party in UP can use this against Congress.

The Hike in petrol prices is going to hit the pocket of the Common Man and at the same time take away a bog portion of Electorate Popularity away from the UDF and Congress in particular.  The Common Man will find a way out to adjust the Monthly Budget by cutting certain expenses, but Congress and the members in UDF will have to go long way to reverse the negative impact on the Electoral Base they are going to Lose.


  1. Yeah, that's pricisely the point. Government's strategic decisions are always linked to their hidden motives / benefits and never for the benefit of citizen at large. And specially when it comes to timing of the decision.

  2. And the State owned Fuel Marketing Companies are working on covering their losses by benchmarking their prices on Crude oil price of $119 when the crude oil price had hit $113 per barrel