Political price freeze

A reminder of the oil subsidy days

Petroleum products — particularly petrol, diesel and cooking gas — are indeed political fuels. Parties in power seldom miss any opportunity to leverage them for their own political ends. Every petroleum minister had one implicit brief — keep fuel prices low before crucial elections to woo the common man. The country’s fuel subsidy burden crossed ~1.60 trillion in 2012-13. A steep decline in the international oil prices gave the newly elected BJP-led NDA regime an opportunity to usher in fuel price reform. The arrangement was working smoothly until international oil prices started moving north.

The incumbent Modi government is leaving no stone unturned to win the Karnataka Assembly election scheduled later this month, a crucial precursor to the General Election 2019. The Union Cabinet has announced a slew of schemes to placate aggrieved voters that include financial assistance of over ~190 billion to sugar mills to clear dues of farmers and the continuance of “Green Revolution-Krishonnati Yojana” up to 2019-20 with a ~332.70 billion Central assistance. But tacitly, the government has also frozen prices of petrol and diesel since April 24 to check price increase, which could be politically detrimental. This is not only an anti-reform move but also political misuse of state-controlled oil companies.

The Tribune, May 4